Exhibit 99.2
NEWPORT FEDERAL SAVINGS BANK
200 Olivia Drive
Newport, Arkansas 72112
(870) 523-3611
NOTICE OF SPECIAL MEETING OF MEMBERS
Notice is hereby given that a Special Meeting of Members (the "Special
Meeting") of Newport Federal Savings Bank (the "Bank") will be held at
__________________________, _______________________, Newport, Arkansas, on
___________, 1997 at __:__ _.m. Central Time. The business to be taken up at the
Special Meeting shall be:
(1) To consider and vote upon a Plan of Conversion providing for the
conversion of the Bank from a federally chartered mutual savings
bank to a federally chartered stock savings bank as a wholly
owned subsidiary of North Arkansas Bancshares, Inc., a newly
organized Tennessee corporation formed by the Bank for the
purpose of becoming the holding company for the Bank and the
related transactions provided for in such Plan of Conversion,
including the amendment of the Bank's existing Federal Mutual
Charter and Bylaws to read in the form of a Federal Stock
Charter and Bylaws for the Bank, pursuant to the laws of the
United States and the Rules and Regulations administered by the
Office of Thrift Supervision.
(2) To consider and vote upon any other matters that may lawfully
come before the Special Meeting.
Note: As of the date of mailing of this Notice of Special Meeting of
Members, the Board of Directors is not aware of any other
matters that may come before the Special Meeting.
The members entitled to vote at the Special Meeting shall be those
members of the Bank at the close of business on __________ ___, 1997, who
continue as members until the Special Meeting and, should the Special Meeting
be, from time to time, adjourned to a later time, until the final adjournment
thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Pam Decker
Secretary
, 1997
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Newport, Arkansas
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YOUR BOARD OF DIRECTORS URGES YOU TO CONSIDER CAREFULLY THIS PROXY
MATERIAL AND, WHETHER OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE SPECIAL
MEETING, TO FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) AS SOON AS
POSSIBLE TO ASSURE THAT YOUR VOTES WILL BE COUNTED. THIS WILL NOT PREVENT YOU
FROM VOTING IN PERSON IF YOU ATTEND THE SPECIAL MEETING.
GLOSSARY
Bank Newport Federal Savings Bank converting from
mutual to stock form, in its mutual form and
the federally chartered stock savings bank
resulting from the Bank's conversion from
mutual to stock form
Company The corporation named North Arkansas
Bancshares, Inc. formed by the Bank to serve
as its holding company after the Conversion
Community Offering The offering of shares of the Common Stock to
the general public concurrently with or after
commencement of the Subscription Offering,
giving preference to natural persons and
trusts of natural persons (including
individual retirement and Keogh retirement
accounts and personal trusts in which such
natural persons have substantial interests)
who are permanent residents of the Bank's
Local Community
Conversion Conversion of the Bank from mutual to stock
form, the issuance of the Bank's outstanding
common stock to the Company and the issuance
of the Company's outstanding common stock to
purchasers in the Subscription Offering and,
if any, the Community Offering and/or
Syndicated Offering
Eligible Account Holders Holders of savings accounts at the Bank with
balances of at least $50 as of December 31,
1995
ESOP Employee Stock Ownership Plan to be
implemented by the Company in the Conversion
Estimated Valuation Range Range of valuation from 15% below to 15% above
the independent appraisal of our estimated pro
forma market value, which was $2,800,000 as of
September 2, 1997
FDIC Federal Deposit Insurance Corporation
Ferguson Ferguson & Company, the firm we engaged to
prepare the appraisal of our estimated pro
forma market value in the Conversion
Local Community The county where our offices are located --
Jackson County, Arkansas
Other Members Depositor and borrower members of the Bank as
of _____________, 1997
OTS Office of Thrift Supervision of the United
States Department of the Treasury
SEC Securities and Exchange Commission
Subscription Offering The offering of shares of the Common Stock to
Eligible Account Holders, the ESOP,
Supplemental Eligible Account Holders and
Other Members
Supplemental Eligible Account Holders of savings accounts at the Bank with
Holders balances of at least $50 as of September 30,
1997
Syndicated Offering If any, the offering of shares of the Common
Stock to the general public during or after
the Subscription Offering in a syndicated
offering by selected dealers
Trident Securities Trident Securities, Inc., the firm we engaged
to advise and assist us in the marketing of
the Common Stock and the conduct of the
Subscription Offering and, if any, the
Community Offering and/or Syndicated Offering
QUESTIONS AND ANSWERS
Set forth below are answers to frequently asked questions about the
procedures for voting on the Plan of Conversion and related matters. For
additional information about the Conversion, please refer to the more detailed
information contained in this proxy statement and the accompanying prospectus.
For assistance, please contact the Stock Information Center at (870) 523-3340.
ABOUT VOTING "FOR" THE PLAN OF CONVERSION
1. Am I eligible to vote at the Special Meeting of Members to be held to
consider the Plan of Conversion?
You are eligible to vote at the Special Meeting of Members to be held on
_________, 1997 if you were a depositor or borrower of Newport Federal
Savings Bank at the close of business on the Voting Record Date (_______,
1997) and continue as such until the Special Meeting. If you were a member
on the Voting Record Date, you should have received a proxy statement and a
proxy card with which to vote.
2. How many votes do I have?
As an account holder of ours, you have one vote for each $100, or fraction
thereof, on deposit in your account(s) with us. Each borrower member may
cast one vote in addition to the number of votes, if any, he or she is
entitled to cast as an account holder. No member may cast more than 1,000
votes.
3. If I vote "against" the Plan of Conversion and it is approved, will I be
prohibited from buying stock during the Subscription Offering?
No. Voting against the Plan of Conversion in no way restricts you from
purchasing the common stock of our holding company in the Subscription
Offering.
4. Did the Board of Directors of Newport Federal Savings Bank unanimously
adopt the Plan of Conversion?
Yes. Our Board of Directors unanimously adopted the Plan of Conversion and
urges that all members vote "FOR" approval of the Plan of Conversion.
5. What happens if Newport Federal Savings Bank does not get enough votes to
approve the Plan of Conversion?
The Conversion would not take place, and we would remain a mutual savings
institution.
6. As a qualifying depositor or borrower of Newport Federal Savings Bank, am I
required to vote?
No. However, failure to return your proxy card or otherwise vote will have
the same effect as a vote AGAINST the Plan of Conversion.
7. What is a Proxy Card?
A proxy card gives you the ability to vote without attending the Special
Meeting in person. If you received more than one informational packet, then
you should vote the proxy cards in all packets. Your proxy card(s) is (are)
located in the window sleeve of your informational packet(s).
You may attend the meeting and vote, even if you have returned your proxy
card, if you choose to do so. However, if you are unable to attend, you
still are represented by proxy. Previously executed proxies, other than
those proxies related to the Conversion which were sent to you, will not be
used to vote for approval of the Plan of Conversion, even if you do not
execute another proxy or attend the Special Meeting and vote in person.
8. How can I get further information concerning the stock offering?
You may call the Stock Information Center at (870) 523-3340 for further
information or to request a copy of the prospectus, a Stock Order Form, a
proxy statement or a proxy card.
THIS INFORMATION DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY NORTH ARKANSAS BANCSHARES, INC. COMMON STOCK. SUCH OFFERS AND
SOLICITATIONS MAY BE MADE ONLY BY MEANS OF THE PROSPECTUS. COPIES OF THE
PROSPECTUS MAY BE OBTAINED BY CALLING THE STOCK INFORMATION CENTER AT (870)
523-3340.
THE SHARES OF NORTH ARKANSAS BANCSHARES, INC. COMMON STOCK BEING OFFERED
ARE NOT SAVINGS OR DEPOSIT ACCOUNTS AND ARE NOT INSURED BY THE SAVINGS BANK
INSURANCE FUND OF THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY.
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NEWPORT FEDERAL SAVINGS BANK
200 OLIVIA DRIVE
NEWPORT, ARKANSAS 72112
(870) 523-3611
PROXY STATEMENT
YOUR PROXY, IN THE FORM ENCLOSED, IS SOLICITED BY OUR BOARD FOR USE AT
A SPECIAL MEETING OF OUR MEMBERS TO BE HELD ON __________________, 1997 AND ANY
ADJOURNMENT OF THAT MEETING, FOR THE PURPOSES SET FORTH IN THE FOREGOING NOTICE
OF SPECIAL MEETING. OUR BOARD OF DIRECTORS URGES YOU TO VOTE FOR THE PLAN OF
CONVERSION.
PURPOSE OF MEETING -- SUMMARY
A Special Meeting of Members (the "Special Meeting") of Newport Federal
Savings Bank (the "Bank") will be held at _____________________________________,
Newport, Arkansas on _________________, _____________, 1997, at __:__ _.m.,
Central Time, for the purpose of considering and voting upon a Plan of
Conversion, which was unanimously adopted by our Board of Directors and which,
if approved by a majority of the total votes eligible to be cast by the members,
will permit us to convert from a federal mutual savings bank to a federal stock
savings bank as a wholly owned subsidiary of North Arkansas Bancshares, Inc.
(the "Company"), a Tennessee corporation which we formed for the purpose of
becoming our holding company. Our Conversion and the acquisition of us by the
Company is referred to in this Proxy Statement as the "Conversion". The
Conversion is contingent upon our members' approval of the Plan of Conversion at
the Special Meeting or any adjournment of the Special Meeting.
The Plan of Conversion provides in part that after receiving final
authorization from the Office of Thrift Supervision ("OTS"), the Company will
offer for sale shares of its common stock, par value $.01 per share (the "Common
Stock"), through the issuance of nontransferable subscription rights, first to
our depositors as of December 31, 1995 with $50.00 or more on deposit with us on
that date ("Eligible Account Holders"), second to the Company's Employee Stock
Ownership Plan of Conversion (the "ESOP") (a tax-qualified employee stock
benefit plan of the Company, as defined in the Plan of Conversion), third to our
depositors, with $50.00 or more on deposit with us on September 30, 1997, who
are not Eligible Account Holders ("Supplemental Eligible Account Holders"), and
fourth to other members, i.e., our depositors and borrower members, other than
Eligible Account Holders and Supplemental Eligible Account Holders, on
___________, 1997 ("Other Members") (the "Subscription Offering"). Subscription
rights received in any of the foregoing categories will be subordinated to the
subscription rights of those in a prior category, with the exception that any
shares of Common Stock sold in excess of the high end of the estimated value
range as established in an independent appraisal, as discussed below, may be
first sold to the ESOP. During or after the Subscription Offering, the Company
may offer shares of the Common Stock not sold in the Subscription Offering to
the general public, in a community offering (the "Community Offering"). In the
Community Offering, preference may be given to natural persons and trusts of
natural persons who are permanent residents of our local community, Jackson
County, Arkansas. Any shares of Common Stock not purchased in the Subscription
and Community Offerings may be sold to a syndicate of underwriters to be managed
by Trident Securities, Inc. ("Trident Securities"). The aggregate price of the
Common Stock to be issued by the Company under the Plan of Conversion is
currently estimated to be between $2,380,000 and $3,220,000, subject to
adjustment, as determined by an independent appraisal of our estimated pro forma
market value as converted and as a wholly owned subsidiary of the Company. See
"The Conversion -- Stock Pricing and Number of Shares to be Issued" in the
accompanying prospectus.
Adoption of our proposed Stock Charter and Bylaws is an integral part
of the Plan of Conversion. Copies of the Plan of Conversion and the proposed
Stock Charter and Bylaws are attached to this Proxy Statement. These documents
provide, among other things, for the termination of voting rights of members and
their rights to receive any surplus remaining in the event of our liquidation.
These rights, except for the rights of Eligible Account Holders and Supplemental
Eligible Account Holders in the liquidation account established for their
benefit upon completion of the Conversion, will vest exclusively in the Company
as the sole holder of our outstanding capital stock.
RECOMMENDATION OF THE BOARD OF DIRECTORS
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
APPROVAL OF THE PLAN OF CONVERSION. VOTING IN FAVOR OF THE PLAN OF CONVERSION
WILL NOT OBLIGATE ANY PERSON TO PURCHASE STOCK.
The Conversion will be accomplished through adoption of a new Charter
and Bylaws to authorize our issuance of capital stock to the Company. Under the
Plan of Conversion, 280,000 shares of the Common Stock, subject to adjustment,
are being offered for sale by the Company. Upon completion of the Conversion, we
will issue all of our newly issued shares of capital stock (100,000 shares) to
the Company in exchange for at least 50% of the net proceeds in the Conversion.
None of our assets will be distributed in order to effect the Conversion other
than to pay expenses incurred as a result of the Conversion.
The net proceeds from the sale of Common Stock in the Conversion will
substantially increase our capital, which will increase the amount of funds
available for lending and investment, and support current operations and the
continued growth of our business. The holding company structure will provide
greater flexibility than we alone would have for diversification of business
activities and geographic operations. We believe that this increased capital and
operating flexibility will enable us to compete more effectively with other
savings institutions and other types of financial service organizations. We also
believe that the Conversion will enhance the future access of both ourselves and
the Company to the capital markets.
NORTH ARKANSAS BANCSHARES, INC.
The Company was formed as a Tennessee corporation in September 1997 at
our direction for the purpose of serving as our holding company after the
Conversion. Prior to the Conversion, the Company has not engaged and is not
expected to engage in any material operations. The Company has received the
approval of the OTS to acquire control of us upon completion of the Conversion.
Upon consummation of the Conversion, the only assets the Company is expected to
own are the capital stock we will issue in the Conversion, a note receivable
from our ESOP and any proceeds from the offering the Company retains.
As a holding company, the Company will have greater flexibility than we
would have to diversify its business activities through the formation of
subsidiaries or through acquisition. The Company will be classified as a unitary
savings and loan holding company after the Conversion and will be required to
comply with OTS regulations and be subject to examination.
The Company's executive offices are located at 200 Olivia Drive,
Newport, Arkansas 72112 and its main telephone number is (870) 523-3611.
NEWPORT FEDERAL SAVINGS BANK
We are a federal mutual savings bank operating through one office in
Newport, Arkansas. We were founded in 1934 as a federally chartered institution
and a member of the FHLB System. Our deposits are insured up to applicable
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limits by the Federal Deposit Insurance Corporation ("FDIC") under the Savings
Association Insurance Fund. At June 30, 1997, we had total assets of $34.4
million, total deposits of $31.1 million and total retained earnings of $2.3
million.
On August 20, 1997, we entered into a Purchase and Assumption Agreement
with NationsBank, N.A. pursuant to which we agreed to purchase the deposits of
the Newport branch of NationsBank and to purchase the real estate on which the
office is located and certain loans and other assets. We expect to assume
approximately $6 million in deposits based on the balance of deposits at the
branch as of June 30, 1997. We must obtain regulatory approval before we can
close this transaction. Assuming we obtain such approval, we expect that this
transaction will close in January 1998.
Our principal business consists of attracting deposits from the general
public and originating residential mortgage loans. We also offer various types
of consumer loans and commercial business loans.
Our executive offices are located at 200 Olivia Drive, Newport,
Arkansas 72112 and our main telephone number is (870) 523-3611.
INFORMATION RELATING TO VOTING AT THE SPECIAL MEETING
Our Board of Directors has fixed the close of business on ________ ___,
1997 as the record date (the "Voting Record Date") for the determination of
members entitled to notice of and to vote at the Special Meeting. Under our
current mutual charter, our members include all holders of deposit or other
authorized accounts and certain of our borrowers. All members of record as of
the close of business on the Voting Record Date who remain members until the
date of the Special Meeting will be entitled to vote at the Special Meeting or
any adjournment thereof.
At the Special Meeting each depositor member may cast one vote for each
$100, or fraction thereof, of the aggregate withdrawal value of all of his or
her savings accounts with us as of the Voting Record Date. Each borrower member
will be entitled to one vote in addition to the number of votes to which he or
she is entitled as a depositor. No member may cast more than 1,000 votes.
Approval of the Plan of Conversion to be presented at the Special
Meeting will require the affirmative vote of at least a majority of the total
outstanding votes of our members eligible to be cast at the Special Meeting. As
of the Voting Record Date for the Special Meeting, there were approximately
_____ votes eligible to be cast, of which _____ votes constitute a majority.
Members may vote at the Special Meeting or any adjournment thereof in
person or by proxy. All properly executed proxies received by us will be voted
in accordance with the instructions indicated on the proxies by the members
giving such proxies. If no contrary instructions are given, proxies will be
voted in favor of the Plan of Conversion. If any other matters are properly
presented before the Special Meeting and may properly be voted upon, the proxies
solicited hereby will be voted on such matters by the proxy holders named
therein as directed by our Board of Directors. Valid, previously executed
general proxies, which typically are obtained from members when they open their
accounts with us, will not be used to vote for approval of the Plan of
Conversion, even if the respective members do not execute another proxy or
attend the Special Meeting and vote in person. You have the right to revoke your
proxy at any time before the voting at the Special Meeting by delivering either
written notice or a duly executed proxy bearing a later date to the Secretary of
Newport Federal Savings Bank. The Secretary must receive this written notice or
the later-dated proxy prior to the Special Meeting or any adjournment thereof.
You may also revoke your proxy by attending the Special Meeting and voting in
person.
FAILURE TO RETURN AN EXECUTED PROXY FOR THE SPECIAL MEETING OR TO
ATTEND THE SPECIAL MEETING IN ORDER TO VOTE IN PERSON WOULD HAVE THE SAME EFFECT
AS VOTING AGAINST THE CONVERSION.
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Proxies may be solicited by our officers, directors or other employees,
in person, by telephone or through other forms of communication. These persons
will be reimbursed by us only for their expenses incurred in connection with
such solicitation.
The proxies solicited hereby will be used only at the Special Meeting
and at any adjournment thereof; they will not be used at any other meeting.
DESCRIPTION OF PLAN OF CONVERSION
THE OTS HAS APPROVED OUR PLAN OF CONVERSION, SUBJECT TO THE APPROVAL OF
THE PLAN OF CONVERSION BY OUR MEMBERS AT A SPECIAL MEETING, AND SUBJECT TO THE
SATISFACTION OF CERTAIN OTHER CONDITIONS IMPOSED BY THE OTS IN ITS APPROVAL. OTS
APPROVAL, HOWEVER, DOES NOT CONSTITUTE A RECOMMENDATION OR ENDORSEMENT OF THE
PLAN OF CONVERSION BY THE OTS.
General
On May 29, 1997, our board of directors adopted a Plan of Conversion,
pursuant to which we will convert from a federally chartered mutual savings bank
to a federally chartered stock savings bank and become a wholly owned subsidiary
of the Company. The Conversion will include adoption of the proposed Federal
Stock Charter and Bylaws which will authorize the issuance of capital stock by
us. Under the Plan, our capital stock is being sold to the Company and the
Common Stock of the Company is being offered to our customers and then to the
public.
The OTS has approved the Company's application to become a savings and
loan holding company and to acquire all of our capital stock to be issued in the
Conversion. Pursuant to such OTS approval, the Company plans to retain 50% of
the net proceeds from the sale of shares of Common Stock and to use the
remaining 50% to purchase all of the capital stock we will issue in the
Conversion.
The shares are first being offered in a Subscription Offering to
holders of subscription rights. To the extent shares of Common Stock remain
available after the Subscription Offering, we may offer shares of Common Stock
in a Community Offering. The Community Offering, if any, may begin anytime
subsequent to the beginning of the Subscription Offering. Shares not subscribed
for in the Subscription and Community Offerings may be offered for sale by the
Company in a Syndicated Community Offering. We have the right, in our sole
discretion, to accept or reject, in whole or in part, any orders to purchase
shares of Common Stock received in the Community and Syndicated Community
Offering.
We must sell Common Stock in an amount equal to our pro forma market
value as a stock savings institution in order for the Conversion to become
effective. We must complete the Community Offering within 45 days after the last
day of the Subscription Offering, unless we extend such period and obtain the
approval of the OTS to do so. The Plan provides that the Conversion must be
completed within 24 months after the date of the approval of the Plan by our
members.
In the event that we are unable to complete the sale of Common Stock
and effect the Conversion within 45 days after the end of the Subscription
Offering, we may request an extension of the period by the OTS. We cannot assure
you that the extension would be granted if requested, nor can we assure you that
our valuation would not substantially change during any such extension. If the
Estimated Valuation Range of the shares must be amended, we cannot assure that
the OTS would approve such amended Estimated Valuation Range. Therefore, it is
possible that if the Conversion cannot be completed within the requisite period
of time, we may not be permitted to complete the Conversion. A substantial delay
caused by an extension of the period may also significantly increase the expense
of the Conversion. We cannot sell any shares of Common Stock unless the Plan is
approved by our members.
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The completion of the offering is subject to market conditions and other
factors beyond our control. We cannot give you any assurances as to the length
of time following approval of the Plan at the meeting of our members that will
be required to complete the Community Offering or other sale of the shares being
offered in the Conversion. If we experience delays, our estimated pro forma
market value upon Conversion could change significantly, together with
corresponding changes in the offering price and the net proceeds to be realized
by us from the sale of the shares. In the event we terminate the Conversion, we
would be required to charge all Conversion expenses against current income and
promptly return any funds collected by us in the offering to each potential
investor, plus interest at the prescribed rate.
EFFECTS OF CONVERSION TO STOCK FORM ON DEPOSITORS AND BORROWERS OF NEWPORT
FEDERAL SAVINGS BANK
VOTING RIGHTS. Currently in our mutual form, our depositor and borrower
members have voting rights and may vote for the election of directors. Following
the Conversion, depositors and borrower members will cease to have voting
rights.
SAVINGS ACCOUNTS AND LOANS. The Conversion will not affect the
balances, terms and FDIC insurance coverage of savings accounts, nor will the
Conversion affect the amounts and terms of loans and obligations of the
borrowers under their individual contractual arrangements with us.
TAX EFFECTS. We have received an opinion from our counsel, Housley
Kantarian & Bronstein, P.C. on the federal tax consequences of the Conversion.
The opinion is an exhibit to the registration statement of which the
accompanying prospectus is a part. The opinion provides, in part, that,: (i) the
Conversion will qualify as a reorganization under Section 368(a)(1)(F) of the
Code, and we will not recognize any taxable gain in either our mutual form or
our stock form as a result of the proposed Conversion; (ii) we will not
recognize any taxable gain upon the receipt of money from the Company for our
stock, nor will the Company recognize any gain upon the receipt of money for the
Common Stock; (iii) our assets in either our mutual or our stock form will have
the same basis before and after the Conversion; (iv) the holding period of our
assets will include the period during which the assets were held by us in our
mutual form prior to Conversion; (v) no gain or loss will be recognized by the
Eligible Account Holders, Supplemental Eligible Account Holders, and Other
Members upon the issuance to them of withdrawable savings accounts in us in the
stock form in the same dollar amount as their savings accounts in us in the
mutual form plus an interest in the liquidation account of us in the stock form
in exchange for their savings accounts in us in the mutual form; (vi) depositors
will recognize gain or loss upon the receipt of liquidation rights and the
receipt of subscription rights in the Conversion, to the extent such liquidation
rights and subscription rights are deemed to have value, as discussed below;
(vii) the basis of each account holder's savings accounts in us after the
Conversion will be the same as the basis of his savings accounts in us prior to
the Conversion, decreased by the fair market value of the nontransferable
subscription rights received and increased by the amount, if any, of gain
recognized on the exchange; (viii) the basis of each account holder's interest
in the liquidation account will be zero; and (ix) the holding period of the
Common Stock acquired through the exercise of subscription rights shall begin on
the date on which the subscription rights are exercised.
With respect to the subscription rights, we have received an opinion of
Ferguson which, based on certain assumptions, concludes that the subscription
rights to be received by Eligible Account Holders and other eligible subscribers
do not have any economic value at the time of distribution or at the time the
subscription rights are exercised, whether or not a public offering takes place.
Such opinion is based on the fact that such rights are: (i) acquired by the
recipients without payment therefor, (ii) non-transferable, (iii) of short
duration, and (iv) afford the recipients the right only to purchase shares at a
price equal to their estimated fair market value, which will be the same price
at which shares for which no subscription right is received in the Subscription
Offering will be offered in the Community Offering. If the subscription rights
granted to Eligible Account Holders or other eligible subscribers are deemed to
have an ascertainable value, receipt of such rights would be taxable only to
those Eligible Account Holders or other eligible subscribers who exercise the
subscription rights in an amount equal to such value (either as a capital gain
or ordinary income), and we could recognize gain on such distribution.
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We are also subject to Arkansas income taxes and have received an
opinion from KPMG Peat Marwick LLP that the Conversion will be treated for
Arkansas state tax purposes similar to the Conversion's treatment for federal
tax purposes.
Unlike a private letter ruling, the opinions of Housley Kantarian &
Bronstein, P.C., Ferguson and KPMG Peat Marwick LLP have no binding effect or
official status, and we cannot give you any assurance that a court would sustain
the conclusions reached in any of those opinions if contested by the IRS or the
Arkansas tax authorities. WE ENCOURAGE ELIGIBLE ACCOUNT HOLDERS, SUPPLEMENTAL
ELIGIBLE ACCOUNT HOLDERS, AND OTHER MEMBERS TO CONSULT WITH THEIR OWN TAX
ADVISERS AS TO THE TAX CONSEQUENCES IN THE EVENT THE SUBSCRIPTION RIGHTS ARE
DEEMED TO HAVE AN ASCERTAINABLE VALUE.
LIQUIDATION ACCOUNT. In the unlikely event of our complete liquidation
in our present mutual form, each depositor is entitled to equal distribution of
any of our assets, pro rata to the value of his accounts, remaining after
payment of claims of all creditors (including the claims of all depositors to
the withdrawal value of their accounts). Each depositor's pro rata share of such
remaining assets would be in the same proportion as the value of his deposit
accounts was to the total value of all deposit accounts in us at the time of
liquidation.
Upon a complete liquidation after the Conversion, each depositor would
have a claim, as a creditor, of the same general priority as the claims of all
other general creditors of ours. Therefore, except as described below, a
depositor's claim would be solely in the amount of the balance in his deposit
account plus accrued interest. A depositor would not have an interest in the
residual value of our assets above that amount if any.
The Plan of Conversion provides for the establishment, upon the
completion of the Conversion, of a special "liquidation account" for the benefit
of Eligible Account Holders and Supplemental Eligible Account Holders in an
amount equal to $_________. Each Eligible Account Holder and Supplemental
Eligible Account Holder, if he continues to maintain his deposit account with
us, would be entitled on a complete liquidation of us after Conversion, to an
interest in the liquidation account prior to any payment to stockholders. Each
Eligible Account Holder would have an initial interest in such liquidation
account for each deposit account held in us on the qualifying date, December 31,
1995. Each Supplemental Eligible Account Holder would have a similar interest as
of the qualifying date, September 30, 1997. The interest as to each deposit
account would be in the same proportion of the total liquidation account as the
balance of the deposit account on the qualifying dates was to the aggregate
balance in all the deposit accounts of Eligible Account Holders and Supplemental
Eligible Account Holders on such qualifying dates. However, if the amount in the
deposit account on any annual closing date of ours is less than the amount in
such account on the respective qualifying dates, then the interest in this
special liquidation account would be reduced from time to time by an amount
proportionate to any such reduction, and the interest would cease to exist if
such deposit account were closed. The interest in the special liquidation
account will never be increased despite any increase in the related deposit
account after the respective qualifying dates.
No merger, consolidation, purchase of bulk assets with assumptions of
savings accounts and other liabilities, or similar transactions with another
insured institution in which transaction we in our converted form are not the
surviving institution shall be considered a complete liquidation. In such
transactions, the liquidation account shall be assumed by the surviving
institution.
RESTRICTIONS ON SALES AND PURCHASES OF SHARES BY DIRECTORS AND OFFICERS
Shares purchased by directors and officers of the Company may not be
sold for one year following completion of the Conversion. An exception to this
rule is a disposition of shares in the event of the death of the director or
officer. Any shares issued to directors and officers as a stock dividend, stock
split, or otherwise with respect to restricted stock shall be subject to the
same restrictions.
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For three years following the Conversion, directors and officers may
purchase shares only through a registered broker or dealer. Exceptions are
available only if the OTS has approved the purchase or the purchase is an arm's
length transaction and involves more than one percent of the outstanding shares.
INTERPRETATION AND AMENDMENT OF THE PLAN OF CONVERSION
We are authorized to interpret and amend the Plan of Conversion. Our
interpretations are final. Amendments to the Plan of Conversion after the
receipt of member approval will not need further member approval unless required
by the OTS.
CONDITIONS AND TERMINATION
Completion of the Conversion requires (i) the approval of the Plan of
Conversion by the affirmative vote of not less than a majority of the total
number of votes eligible to be cast by our members; and (ii) completion of the
sale of shares within 24 months following approval of the Plan of Conversion by
our members. If these conditions are not satisfied, the Plan of Conversion will
be terminated and we will continue our business in the mutual form of
organization. We may terminate the Plan of Conversion at any time prior to the
meeting of members to vote on the Plan or at any time thereafter with the
approval of the OTS.
OTHER
All statements made in this Proxy Statement are hereby qualified by the
contents of the Plan of Conversion which is attached as Exhibit A to this Proxy
Statement. Please consult the Plan of Conversion for further information. In
addition, please refer to the section entitled "The Conversion" in the
accompanying prospectus for a more detailed discussion of various aspects of the
Plan of Conversion.
CHARTER AND BYLAWS
The following is a summary of certain provisions of the Charter and
Bylaws which will become effective upon our conversion into a federally
chartered stock savings bank. Complete copies of the Stock Charter and Bylaws
are attached as Exhibits B and C to this Proxy Statement.
In stock form, we will be authorized to issue 9,000,000 shares of
common stock, $1.00 par value per share. Our common stock will not be insured by
the FDIC. All of our outstanding common stock will be owned by the Company.
Accordingly, exclusive voting rights with respect to our affairs after the
Conversion will be vested in the Company's Board of Directors.
Our Charter provides that the number of directors shall be not fewer
than five or more than 15, with the exact number to be fixed in the Bylaws. The
proposed Stock Bylaws provide that the number directors shall be five. Directors
will serve for terms of three years and the terms of directors will be staggered
so that approximately one-third of the Board is elected each year.
In addition to the common stock, we will be authorized to issue
3,000,000 shares of serial preferred stock, $1.00 par value per share. The Board
of Directors will be permitted, without further stockholder approval, to
authorize the issuance of preferred stock in series and to fix the voting
powers, designations, preferences and relative, participating, optional,
conversion and other special rights of the shares of each series of the
preferred stock and the qualifications, limitations and restrictions thereof.
Preferred stock may rank prior to common stock in dividend rights, liquidation
preferences, or both, and may have voting rights.
7
Neither the Stock Charter nor the Bylaws provide for indemnification of
officers and directors. However, we will be required by OTS regulations (as we
currently are) to indemnify its directors, officers and employees against legal
and other expenses incurred in defending lawsuits brought against them by
reasons of the performance of their official duties. Indemnification may be made
to any such person only if final judgment on the merits is in his favor or, in
case of (i) settlement, (ii) final judgment against him or (iii) final judgment
in his favor, other than on the merits, if a majority of our directors
determines that he was acting in good faith within the scope of his employment
or authority as he could reasonably have perceived it under the circumstances
and for a purpose he could have reasonably believed under the circumstances was
in our best interest or the best interest of our stockholders. If a majority of
our directors concludes that in connection with an action any person ultimately
may become entitled to indemnification, the directors may authorize payment of
reasonable costs and expenses arising from defense or settlement of such action.
HOW TO ORDER STOCK
The accompanying prospectus contains information about our business and
financial condition of the and additional information about the Conversion and
the Subscription Offering and the Community Offering. Enclosed is a Stock Order
Form you must use to purchase for stock. You are not obligated to purchase stock
and voting to approve the Conversion will not obligate you to purchase for
stock.
All Subscription Rights are nontransferable and will expire if not
exercised by returning the accompanying Stock Order Form with full payment (or
appropriate instructions authorizing withdrawal from a savings or certificate
account with us) for all shares for which subscription is made to the Company by
__:__ _.m., Central Time, on ________ ___, 1997, unless extended by us. A
postage-paid reply envelope is provided for this purpose. If not all of the
shares are subscribed for in the Subscription Offering by our members, the
remaining shares may be offered to the general public in the Community Offering
with preference given to natural persons and trusts of natural persons who
reside in Jackson County, Arkansas.
THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS LIMITED IN ITS
SCOPE TO USE IN THE SOLICITATION OF PROXIES FOR THE SPECIAL MEETING TO VOTE ON
THE PLAN OF CONVERSION. IT IS NOT INTENDED FOR USE IN THE OFFERING OF THE COMMON
STOCK. SUCH OFFERING IS MADE ONLY BY THE ACCOMPANYING PROSPECTUS.
ADDITIONAL INFORMATION
The information contained in the accompanying prospectus includes a
more detailed description of the Plan of Conversion and is intended to help you
evaluate the Conversion.
All persons eligible to vote at the Special Meeting should review both
this Proxy Statement and the accompanying prospectus carefully.
YOUR BOARD OF DIRECTORS URGES YOU TO CONSIDER CAREFULLY THIS PROXY
MATERIAL AND, WHETHER OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE SPECIAL
MEETING, TO FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) AS SOON AS
POSSIBLE TO ASSURE THAT YOUR VOTES WILL BE COUNTED. THIS WILL NOT PREVENT YOU
FROM VOTING IN PERSON IF YOU ATTEND THE SPECIAL MEETING. YOU MAY REVOKE YOUR
PROXY BY WRITTEN INSTRUMENT DELIVERED TO THE SECRETARY OF NEWPORT FEDERAL
SAVINGS BANK AT ANY TIME PRIOR TO OR AT THE SPECIAL MEETING OR BY ATTENDING THE
SPECIAL MEETING AND VOTING IN PERSON.
8
THIS PROXY STATEMENT IS NOT AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY THE COMMON STOCK. THE OFFER IS MADE ONLY BY THE ACCOMPANYING
PROSPECTUS.
BY ORDER OF THE BOARD OF DIRECTORS
Pam Decker
Secretary
, 1997
- --------------
Newport, Arkansas
9
EXHIBIT A
NEWPORT FEDERAL SAVINGS BANK
NEWPORT, ARKANSAS
PLAN OF CONVERSION
FROM MUTUAL TO STOCK ORGANIZATION
I. GENERAL.
On May 29, 1997, the Board of Directors of Newport Federal Savings Bank,
Newport, Arkansas (the "Bank"), after careful study and consideration, adopted
this Plan of Conversion from Mutual to Stock Organization (the "Plan"), whereby
the Bank will convert from a federal mutual savings Bank to a federal capital
stock savings Bank (the "Converted Bank") as a wholly owned subsidiary of a
Holding Company to be formed at the direction of the Bank (the "Conversion").
The Conversion is subject to regulations of the Director of the Office of
Thrift Supervision of the United States Department of the Treasury ("OTS")
pursuant to Section 5(i) of the Home Owners' Loan Act and Part 563b of the Rules
and Regulations Applicable to All Savings Associations.
The Plan is subject to the prior written approval of the OTS and must be
adopted by the affirmative vote of at least a majority of the total outstanding
votes of the Members of the Bank. Pursuant to the Plan, shares of Conversion
Stock in the Holding Company will be offered in a Subscription Offering pursuant
to non-transferable Subscription Rights at a predetermined and uniform price
first to the Bank's Eligible Account Holders of record as of December 31, 1995,
second to the Bank's Tax-Qualified Employee Stock Benefit Plans, third to
Supplemental Eligible Account Holders of record as of the last day of the
calendar quarter preceding OTS approval of the Bank's application to convert to
stock form and fourth to Other Members of the Bank. Concurrently with the
Subscription Offering, shares not subscribed for in the Subscription Offering
may be offered by the Bank to the general public in a Community Offering. Shares
remaining, if any, may then be offered to the general public in an underwritten
public offering or otherwise. The aggregate Purchase Price of the Conversion
Stock will be based upon an independent appraisal of the Bank and will reflect
the estimated pro forma market value of the Converted Bank, as a subsidiary of
the Holding Company.
It is the desire of the Board of Directors to attract new capital to the
Converted Bank to increase its net worth, to support future savings growth, to
increase the amount of funds available for other lending and investment, to
provide greater resources for the expansion of customer services and to
facilitate future expansion. In addition, the Board of Directors currently
intends to implement stock option plans and other stock benefit plans subsequent
to the Conversion to better attract and retain qualified directors and officers.
It is the further desire of the Board of Directors to reorganize the Converted
Bank as the wholly owned subsidiary of the Holding Company to enhance
flexibility of operations, diversification of business opportunities and
financial capability for business and regulatory purposes and to enable the
Converted Bank to compete more effectively with other financial service
organizations.
No change will be made in the Board of Directors or management of the Bank
as a result of the Conversion.
II. DEFINITIONS.
Acting in Concert: The term "Acting in Concert" means (i) knowing
-----------------
participation in a joint activity or interdependent conscious parallel action
towards a common goal whether or not pursuant to an express agreement; or (ii) a
combination or pooling of voting or other interests in the securities of an
issuer for a common purpose pursuant to any contract, understanding,
relationship, agreement or other arrangement, whether written or otherwise. A
person (as defined by 12 C.F.R. (S)563b.2(a)(26)) who acts in concert with
another person ("other party") shall also be deemed
A-1
to be acting in concert with any person who is also acting in concert with that
other party, except that any Tax-Qualified Employee Stock Benefit Plan will not
be deemed to be acting in concert with its trustee or a person who serves in a
similar capacity solely for the purpose of determining whether stock held by the
trustee and stock held by the Tax-Qualified Employee Benefit Plan will be
aggregated.
Associate: The term "Associate," when used to indicate a relationship with
---------
any person, means (i) any corporation or organization (other than the Bank, the
Holding Company or a majority-owned subsidiary of the Bank or the Holding
Company) of which such person is an officer or partner or is, directly or
indirectly, the beneficial owner of 10% or more of any class of equity
securities; (ii) any trust or other estate in which such person has a
substantial beneficial interest or as to which such person serves as trustee or
in a similar fiduciary capacity, except that such term shall not include a "Tax-
Qualified Employee Stock Benefit Plan," as defined herein; and (iii) any
relative or spouse of such person, or any relative of such spouse, who has the
same home as such person or who is a director of the Bank or the Holding
Company, or any of their subsidiaries.
Bank: The term "Bank" means Newport Federal Savings Bank, either in its
----
present form as a federal mutual savings bank or in its future form as a federal
mutual savings bank in the event of the amendment of its federal mutual charter
and bylaws to substantially conform with the current regulatory model federal
mutual savings bank charter and bylaws.
Capital Stock: The term "Capital Stock" means any and all authorized shares
-------------
of stock of the Converted Bank.
Community Offering: The term "Community Offering" means the offering of
------------------
shares of Conversion Stock to the general public by the Holding Company
concurrently with or after commencement of the Subscription Offering, giving
preference to natural persons and trusts of natural persons (including
individual retirement and Keogh retirement accounts and personal trusts in which
such natural persons have substantial interests) who are permanent Residents of
the Bank's Local Community.
Conversion: The term "Conversion" means (i) the amendment of the Bank's
----------
federal mutual charter and bylaws to authorize issuance of shares of Capital
Stock by the Converted Bank and to conform to the requirements of a federal
capital stock savings bank under the laws of the United States and applicable
regulations; (ii) the issuance and sale of Conversion Stock by the Holding
Company in the Subscription and Community Offerings and/or in an underwritten
public offering or otherwise; and (iii) the purchase by the Holding Company of
all the Capital Stock of the Converted Bank to be issued in the Conversion
immediately following or concurrently with the close of the sale of the
Conversion Stock.
Conversion Stock: The term "Conversion Stock" means the shares of common
----------------
stock to be issued and sold by the Holding Company pursuant to the Plan.
Converted Bank: The term "Converted Bank" means Newport Federal Savings
--------------
Bank in its form as a federal capital stock savings bank resulting from the
conversion of the Bank to the stock form of organization in accordance with the
terms of the Plan.
Eligibility Record Date: The term "Eligibility Record Date" means the close
-----------------------
of business on December 31, 1995.
Eligible Account Holder: The term "Eligible Account Holder" means each
-----------------------
holder of one or more Qualifying Deposits in the Bank on the Eligibility Record
Date.
Holding Company: The term "Holding Company" means a corporation to be
---------------
incorporated by the Bank under state law for the purpose of becoming a holding
company for the Converted Bank through the issuance and sale of
A-2
Conversion Stock under the Plan and the concurrent acquisition of 100% of the
Capital Stock to be issued and sold pursuant to the Plan.
Holding Company Stock: The term "Holding Company Stock" means any and all
---------------------
authorized shares of stock of the Holding Company.
Independent Appraiser: The term "Independent Appraiser" means a person
---------------------
independent of the Bank, experienced and expert in the area of corporate
appraisal, and acceptable to the OTS, retained by the Bank to prepare an
appraisal of the pro forma market value of the Converted Bank, as a subsidiary
of the Holding Company.
Local Community: The term "Local Community" means the county or counties in
---------------
which the Bank's office or offices are located.
Market Maker: The term "Market Maker" means a dealer (i.e., any person who
------------
engages, either for all or part of such person's time, directly or indirectly,
as agent, broker or principal in the business of offering, buying, selling or
otherwise dealing or trading in securities issued by another person) who, with
respect to a particular security, (i)(a) regularly publishes bona fide,
competitive bid and offer quotations in a recognized interdealer quotation
system or (b) furnishes bona fide competitive bid and offer quotations on
request and (ii) is ready, willing and able to effect transactions in reasonable
quantities at its quoted prices with other brokers or dealers.
Member: The term "Member" means any person or entity who qualifies as a
------
member of the Bank under its federal mutual charter and bylaws prior to the
Conversion.
Officer: The term "Officer" means an executive officer of the Holding
-------
Company or the Bank (as applicable), including the Chairman of the Board,
President, Executive Vice Presidents, Senior Vice Presidents in charge of
principal business functions, Secretary and Treasurer.
Order Form: The term "Order Form" means the order form or forms to be used
----------
by Eligible Account Holders, Supplemental Eligible Account Holders and other
persons eligible to purchase Conversion Stock pursuant to the Plan.
Other Member: The term "Other Member" means any person, other than an
------------
Eligible Account Holder or a Supplemental Eligible Account Holder, who is a
Member as of the Voting Record Date.
OTS: The term "OTS" means the Office of Thrift Supervision of the United
---
States Department of the Treasury or any successor agency having jurisdiction
over the Conversion.
Plan: The term "Plan" means this Plan of Conversion under which the Bank
----
will convert from a federal mutual savings Bank to a federal capital stock
savings Bank as a wholly owned subsidiary of the Holding Company, as originally
adopted by the Board of Directors or amended in accordance with the terms
hereof.
Qualifying Deposit: The term "Qualifying Deposit" means each savings
------------------
balance in any Savings Account in the Bank as of the close of business on the
Eligibility Record Date or the Supplemental Eligibility Record Date, as
applicable, which is equal to or greater than $50.00.
Registration Statement: The term "Registration Statement" means the
----------------------
Registration Statement on Form S-1, or such other form as may be appropriate,
and any amendments thereto, filed by the Holding Company with the SEC pursuant
to the Securities Act of 1933, as amended, to register shares of Conversion
Stock.
Resident: The term "Resident," as used in this Plan in relation to the
--------
preference afforded natural persons and trusts of natural persons in the Local
Community, includes any natural person who occupies a dwelling within the Local
Community, has an intention to remain within the Local Community for a period of
time (manifested by establishing
A-3
a physical, ongoing, non-transitory presence within the Local Community) and
continues to reside therein at the time of the Community Offering. The Bank may
utilize deposit or loan records or such other evidence provided to it to make
the determination as to whether a person is residing in the Local Community. To
the extent the "person" is a corporation or other business entity, the principal
place of business or headquarters should be within the Local Community. To the
extent the "person" is a personal benefit plan, the circumstances of the
beneficiary shall apply with respect to this definition. In the case of all
other benefit plans, circumstances of the trustee shall be examined for purposes
of this definition. In all cases, such determination shall be in the sole
discretion of the Bank.
Sale: The terms "sale" and "sell" mean every contract to sell or otherwise
----
dispose of a security or an interest in a security for value, but such terms do
not include an exchange of securities in connection with a merger or acquisition
approved by the OTS or any other federal agency having jurisdiction.
Savings Account: The term "Savings Account" means a withdrawable deposit in
---------------
the Bank.
SEC: The term "SEC" means the Securities and Exchange Commission or any
---
successor agency.
Special Meeting: The term "Special Meeting" means the Special Meeting of
---------------
Members to be called for the purpose of submitting the Plan to the Members for
their approval.
Subscription Offering: The term "Subscription Offering" means the offering
---------------------
of shares of Conversion Stock to Eligible Account Holders, Tax-Qualified
Employee Stock Benefit Plans, Supplemental Eligible Account Holders and Other
Members under the Plan.
Subscription and Community Prospectus: The term "Subscription and Community
-------------------------------------
Prospectus" means the final prospectus to be used in connection with the
Subscription and Community Offerings.
Subscription Rights: The term "Subscription Rights" means non-transferable,
-------------------
non-negotiable, personal rights of Eligible Account Holders, Tax-Qualified
Employee Stock Benefit Plans, Supplemental Eligible Account Holders and Other
Members to purchase Conversion Stock offered under the Plan.
Supplemental Eligibility Record Date: The term "Supplemental Eligibility
------------------------------------
Record Date" means the last day of the calendar quarter preceding the approval
of the Plan by the OTS.
Supplemental Eligible Account Holder: The term "Supplemental Eligible
------------------------------------
Account Holder" means each holder of one or more Qualifying Deposits in the Bank
(other than Officers and directors of the Bank and their Associates) on the
Supplemental Eligibility Record Date.
Tax-Qualified Employee Stock Benefit Plan: The term "Tax-Qualified Employee
-----------------------------------------
Stock Benefit Plan" means any defined benefit plan or defined contribution plan
of the Bank or the Holding Company, such as an employee stock ownership plan,
stock bonus plan, profit sharing plan or other plan, which, with its related
trust, meets the requirements to be "qualified" under section 401 of the
Internal Revenue Code of 1986, as amended. "Non-Tax-Qualified Employee Stock
Benefit Plan" means any defined benefit plan or defined contribution plan which
is not so qualified.
Voting Record Date: The term "Voting Record Date" means the date fixed by
------------------
the Board of Directors of the Bank to determine Members of the Bank entitled to
vote at the Special Meeting.
A-4
III. STEPS PRIOR TO SUBMISSION OF THE PLAN TO THE MEMBERS FOR APPROVAL.
Prior to submission of the Plan to its Members for approval, the Bank must
receive approval from the OTS of an Application for Approval of Conversion on
Form AC, which includes the Plan to convert to the stock form of organization
(the "Application"). The following steps must be taken prior to such regulatory
approval:
A. The Board of Directors shall adopt the Plan by not less than a
two-thirds vote.
B. Promptly after adoption of the Plan by the Board of Directors, the
Bank shall notify its Members of the adoption of the Plan by publishing a
statement in a newspaper having a general circulation in each community in
which the Bank maintains an office and/or by mailing a letter to each of
its Members.
C. A press release relating to the proposed Conversion may be
submitted to the local media.
D. Copies of the Plan adopted by the Board of Directors shall be made
available for inspection by Members at each office of the Bank.
E. The Bank shall cause the Holding Company to be incorporated under
state law, and the Board of Directors of the Holding Company shall concur
in the Plan by at least a two-thirds vote.
F. The Bank shall submit or cause to be submitted the Application to
the OTS. The Holding Company shall submit or cause to be submitted an
Application H-(e)1 or Application H-(e)1-S to the OTS and the Registration
Statement to the SEC. Upon receipt of advice from the regulatory
authorities that the Application has been received and is in the prescribed
form, the Bank shall publish a "Notice of Filing of an Application for
Conversion to a Stock Savings Bank" in a newspaper of general circulation,
as referred to in Paragraph III.B. herein. The Bank also shall prominently
display a copy of such notice in each of its offices. The Holding Company
shall publish notice of the filing of the Application H-(e)1 or H-(e)1-S in
accordance with applicable regulations.
G. The Bank shall obtain an opinion of its tax advisors or a
favorable ruling from the United States Internal Revenue Service which
shall state that the Conversion will not result in a taxable reorganization
for federal income tax purposes to the Bank. Receipt of a favorable opinion
or ruling is a condition precedent to completion of the Conversion.
H. The Plan shall be submitted to a vote of the Members at the
Special Meeting after approval by the OTS.
IV. MEETING OF MEMBERS.
Following receipt of approval of the Plan by the OTS, the Special Meeting
to vote on the Plan shall be scheduled in accordance with the Bank's bylaws and
applicable regulations. Notice of the Special Meeting will be given by means of
a proxy statement authorized for use by the OTS. Promptly after receipt of
approval and at least 20 days but not more than 45 days prior to the Special
Meeting, the Bank will distribute proxy solicitation materials to all voting
Members as of the Voting Record Date established for voting at the Special
Meeting. Proxy materials will also be sent to each beneficial holder of an
Individual Retirement Account where the name of the beneficial holder is
disclosed on the Bank's records. The proxy solicitation materials will include a
copy of the Proxy Statement and other documents authorized for use by the
regulatory authorities and may also include a Subscription and Community
Prospectus as provided in Paragraph VI. below. The Bank will also advise each
Eligible Account Holder and Supplemental Eligible Account Holder not entitled to
vote at the Special Meeting of the proposed Conversion and the scheduled Special
Meeting and provide a postage paid card on which to indicate whether he or she
wishes to receive the Subscription and
A-5
Community Prospectus, if the Subscription and Community Offerings are not held
concurrently with the proxy solicitation.
Pursuant to applicable regulations, an affirmative vote of at least a
majority of the total outstanding votes of the Members will be required for
approval of the Plan. Voting may be in person or by proxy. The OTS shall be
promptly notified of the actions of the Members at the Special Meeting.
V. SUMMARY PROXY STATEMENT.
The Proxy Statement to be furnished to Members may be in summary form,
provided that a statement is made in boldface type that a more detailed
description of the proposed transaction may be obtained by returning an enclosed
postage paid card or other written communication requesting a supplemental
information statement. Without prior approval from the OTS, the Special Meeting
shall not be held fewer than 20 days after the last day on which the
supplemental information statement is mailed to Members requesting the same. The
supplemental information statement may be combined with the Subscription and
Community Prospectus if the Subscription and Community Offerings are commenced
concurrently with the proxy solicitation of Members for the Special Meeting.
VI. OFFERING DOCUMENTS.
The Holding Company may commence the Subscription Offering and, provided
that the Subscription Offering has commenced, may commence the Community
Offering concurrently with or during the proxy solicitation of Members and may
close the Subscription and Community Offerings before the Special Meeting,
provided that the offer and sale of the Conversion Stock shall be conditioned
upon approval of the Plan by the Members at the Special Meeting.
The Bank's proxy solicitation materials may require Eligible Account
Holders, Supplemental Eligible Account Holders and Other Members to return to
the Bank by a reasonable date certain a postage-paid written communication
requesting receipt of a Subscription and Community Prospectus in order to be
entitled to receive a Subscription and Community Prospectus, provided that the
Subscription Offering shall not be closed until the expiration of 30 days after
mailing proxy solicitation materials to voting Members and a postage-paid
written communication to non-voting Eligible Account Holders and Supplemental
Eligible Account Holders. If the Subscription Offering is commenced within 45
days after the Special Meeting, the Bank shall transmit, no more than 30 days
prior to the commencement of the Subscription Offering, to each voting Member
who had been furnished with proxy solicitation materials and to each non-voting
Eligible Account Holder and Supplemental Eligible Account Holder, written notice
of the commencement of the Subscription Offering which shall state that the Bank
is not required to furnish a Subscription and Community Prospectus to them
unless they return by a reasonable date certain a postage-paid written
communication requesting the receipt of the Subscription and Community
Prospectus.
Prior to commencement of the Subscription and Community Offerings, the
Holding Company shall file the Registration Statement with the SEC pursuant to
the Securities Act of 1933, as amended. The Holding Company shall not distribute
the Subscription and Community Prospectus until the Registration Statement
containing the same has been declared effective by the SEC and the
aforementioned documents have been approved by the OTS. The Subscription and
Community Prospectus may be combined with the Proxy Statement for the Special
Meeting.
VII. CONSUMMATION OF CONVERSION.
The date of consummation of the Conversion will be the effective date of
the amendment of the Bank's federal mutual charter to read in the form of a
federal stock charter, which shall be the date of the issuance and sale of the
Conversion Stock. After receipt of all orders for Conversion Stock, and
concurrently with the execution thereof, the amendment of the Bank's federal
mutual charter to authorize the issuance of shares of Capital Stock and to
conform to the requirements of a federal capital stock savings Bank will be
declared effective by the OTS, and the amended bylaws approved by the Members
will become effective. At such time, the Conversion Stock will be issued and
sold by the
A-6
Holding Company, the Capital Stock to be issued in the Conversion will be issued
and sold to the Holding Company, and the Converted Bank will become a wholly
owned subsidiary of the Holding Company. The Converted Bank will issue to the
Holding Company 100,000 shares of its common stock, representing all of the
shares of Capital Stock to be issued by the Converted Bank in the Conversion,
and the Holding Company will make payment to the Converted Bank of at least 50
percent of the aggregate net proceeds realized by the Holding Company from the
sale of the Conversion Stock under the Plan, or such other portion of the
aggregate net proceeds as may be authorized or required by the OTS.
VIII. STOCK OFFERING.
A. General.
-------
The aggregate purchase price of all shares of Conversion Stock which
will be offered and sold will be equal to the estimated pro forma market
value of the Converted Bank, as a subsidiary of the Holding Company, as
determined by an independent appraisal. The exact number of shares of
Conversion Stock to be offered will be determined by the Board of
Directors of the Bank and the Board of Directors of the Holding Company,
or their respective designees, in conjunction with the determination of
the Purchase Price (as that term is defined in Paragraph VIII.B. below).
The number of shares to be offered may be subsequently adjusted prior to
completion of the Conversion as provided below.
B. Independent Evaluation and Purchase Price of Shares.
---------------------------------------------------
All shares of Conversion Stock sold in the Conversion will be sold
at a uniform price per share referred to in this Plan as the "Purchase
Price." The Purchase Price and the total number of shares of Conversion
Stock to be offered in the Conversion will be determined by the Board of
Directors of the Bank and the Board of Directors of the Holding Company,
or their respective designees, immediately prior to the simultaneous
completion of all such sales contemplated by this Plan on the basis of
the estimated pro forma market value of the Converted Bank, as a
subsidiary of the Holding Company, at such time. The estimated pro forma
market value of the Converted Bank, as a subsidiary of the Holding
Company, will be determined for such purpose by an Independent Appraiser
on the basis of such appropriate factors as are not inconsistent with
applicable regulations. Immediately prior to the Subscription and
Community Offerings, a subscription price range of shares for the
offerings will be established (the "Valuation Range"), which will vary
from 15% above to 15% below the midpoint of such range. The number of
shares of Conversion Stock ultimately issued and sold will be determined
at the close of the Subscription and Community Offerings and any other
offering. The subscription price range and the number of shares to be
offered may be changed subsequent to the Subscription and Community
Offerings as the result of any appraisal updates prior to the completion
of the Conversion, without notifying eligible purchasers in the
Subscription and Community Offerings and without a resolicitation of
subscriptions, provided the aggregate Purchase Price is not below the low
end or more than 15 percent above the high end of the Valuation Range
previously approved by the OTS or if, in the opinion of the Boards of
Directors of the Bank and the Holding Company, the new Valuation Range
established by the appraisal update does not result in a materially
different capital position of the Converted Bank.
Notwithstanding the foregoing, no sale of Conversion Stock may be
consummated unless, prior to such consummation, the Independent Appraiser
confirms to the Bank and the Holding Company and to the OTS that, to the
best knowledge of the Independent Appraiser, nothing of a material nature
has occurred which, taking into account all relevant factors, would cause
the Independent Appraiser to conclude that the aggregate value of the
Conversion Stock at the Purchase Price is incompatible with its estimate
of the aggregate consolidated pro forma market value of the Converted
Bank, as a subsidiary of the Holding Company. If such confirmation is not
received, the Bank may cancel the Subscription and Community Offerings
and/or any other offering, extend the Conversion, establish a new
Valuation Range, extend, reopen or hold new Subscription and Community
Offerings and/or other offerings or take such other action as the OTS may
permit.
A-7
C. Subscription Offering.
---------------------
Non-transferable Subscription Rights to purchase shares of Conversion Stock
will be issued at no cost to Eligible Account Holders, Tax-Qualified Employee
Stock Benefits Plans, Supplemental Eligible Account Holders and Other Members
pursuant to priorities established by applicable regulations. All shares must be
sold, and, to the extent that Conversion Stock is available, no subscriber will
be allowed to purchase fewer than 25 shares of Conversion Stock, provided that
this number shall be decreased if the aggregate purchase price exceeds $500. The
priorities established by applicable regulations for the purchase of shares are
as follows:
1. Category No. 1: Eligible Account Holders.
a. Each Eligible Account Holder shall receive, without payment, non-
transferable Subscription Rights to purchase Conversion Stock in an amount
equal to the greater of $50,000 (or 5% of the total offering of shares of
Conversion Stock for Eligible Account Holders with more than one Qualifying
Deposit), one-tenth of one percent of the total offering of shares of
Conversion Stock or 15 times the product (rounded down to the next whole
number) obtained by multiplying the total number of shares of Conversion
Stock to be issued by a fraction of which the numerator is the amount of
the Qualifying Deposit of the Eligible Account Holder and the denominator
is the total amount of Qualifying Deposits of all Eligible Account Holders
in the Converted Bank in each case on the Eligibility Record Date.
b. Non-transferable Subscription Rights to purchase Conversion Stock
received by Officers and directors of the Bank and their Associates based
on their increased deposits in the Bank in the one year period preceding
the Eligibility Record Date shall be subordinated to all other
subscriptions involving the exercise of non-transferable Subscription
Rights to purchase shares pursuant to this Subscription Category.
c. In the event of an oversubscription for shares of Conversion
Stock pursuant to this Category, shares of Conversion Stock shall be
allocated among subscribing Eligible Account Holders as follows:
(I) Shares of Conversion Stock shall be allocated among
subscribing Eligible Account Holders so as to permit each such Account
Holder, to the extent possible, to purchase a number of shares of
Conversion Stock sufficient to make its total allocation equal to 100
shares or the total amount of its subscription, whichever is less.
(II) Any shares not so allocated shall be allocated among the
subscribing Eligible Account Holders on an equitable basis, related to
the amounts of their respective aggregate Qualifying Deposits, as
compared to the total aggregate Qualifying Deposits of all subscribing
Eligible Account Holders.
2. Category No. 2: Tax-Qualified Employee Stock Benefit Plans.
a. Tax-Qualified Employee Stock Benefit Plans of the Converted Bank
shall receive, without payment, non-transferable Subscription Rights to
purchase up to 10% of the shares of Conversion Stock issued in the
Conversion.
b. Subscription rights received in this Category shall be
subordinated to the Subscription Rights received by Eligible Account
Holders pursuant to Category No. 1, provided that any shares of Conversion
Stock sold in excess of the high end of the Valuation Range may be first
sold to Tax-Qualified Employee Stock Benefit Plans.
A-8
3. Category No. 3: Supplemental Eligible Account Holders.
a. In the event that the Eligibility Record Date is more than 15
months prior to the date of the latest amendment of the Application filed
prior to OTS approval, then each Supplemental Eligible Account Holder shall
receive, without payment, non-transferable Subscription Rights to purchase
Conversion Stock in an amount equal to the greater of $50,000 (or 5% of the
total offering of shares of Conversion Stock for Supplemental Eligible
Account Holders with more than one Qualifying Deposit), one-tenth of one
percent of the total offering of shares of Conversion Stock or 15 times the
product (rounded down to the next whole number) obtained by multiplying the
total number of the shares of Conversion Stock to be issued by a fraction
of which the numerator is the amount of the Qualifying Deposit of the
Supplemental Eligible Account Holder and the denominator is the total
amount of the Qualifying Deposits of all Supplemental Eligible Account
Holders on the Supplemental Eligibility Record Date.
b. Subscription Rights received pursuant to this Category shall be
subordinated to the Subscription Rights received by the Eligible Account
Holders and by Tax-Qualified Employee Stock Benefit Plans pursuant to
Category Nos. 1 and 2.
c. Any non-transferable Subscription Rights to purchase shares
received by an Eligible Account Holder in accordance with Category No. 1
shall reduce to the extent thereof the Subscription Rights to be
distributed to such Eligible Account Holder pursuant to this Category.
d. In the event of an oversubscription for shares of Conversion Stock
pursuant to this Category, shares of Conversion Stock shall be allocated
among the subscribing Supplemental Eligible Account Holders as follows:
(I) Shares of Conversion Stock shall be allocated among
subscribing Supplemental Eligible Account Holders so as to permit each
such Supplemental Eligible Account Holder, to the extent possible, to
purchase a number of shares of Conversion Stock sufficient to make its
total allocation (including the number of shares of Conversion Stock,
if any, allocated in accordance with Category No. 1) equal to 100
shares of Conversion Stock or the total amount of its subscription,
whichever is less.
(II) Any shares of Conversion Stock not allocated in accordance
with subparagraph (I) above shall be allocated among the subscribing
Supplemental Eligible Account Holders on an equitable basis, related
to the amounts of their respective aggregate Qualifying Deposits on
the Supplemental Eligibility Record Date as compared to the total
aggregate Qualifying Deposits of all subscribing Supplemental Eligible
Account Holders in each case on the Supplemental Eligibility Record
Date.
4. Category No. 4: Other Members.
a. Each Other Member, other than those Members who are Eligible
Account Holders or Supplemental Eligible Account Holders, shall receive,
without payment, non-transferable Subscription Rights to purchase
Conversion Stock in an amount equal to the greater of $50,000 (or 5% of the
total offering of shares of Conversion Stock for Other Members with more
than one deposit account in, or loan from, the Bank on the Voting Record
Date) or one-tenth of one percent of the total offering of shares of
Conversion Stock.
A-9
b. Subscription Rights received pursuant to this Category shall be
subordinated to the Subscription Rights received by Eligible Account
Holders, Tax-Qualified Employee Stock Benefit Plans and Supplemental
Eligible Account Holders pursuant to Category Nos. 1, 2 and 3.
c. In the event of an oversubscription for shares of Conversion Stock
pursuant to this Category, the shares of Conversion Stock available shall
be allocated among subscribing Other Members so as to permit each
subscribing Other Member, to the extent possible, to purchase a number of
shares sufficient to make his or her total allocation of Conversion Stock
equal to the lesser of 100 shares or the number of shares subscribed for by
the Other Member. The shares remaining thereafter will be allocated among
subscribing Other Members whose subscriptions remain unsatisfied on a
reasonable basis as determined by the Board of Directors.
Order Forms may provide that the maximum purchase limitation shall be
based on the midpoint of the Valuation Range. In the event the aggregate
Purchase Price of the Conversion Stock issued and sold is below the
midpoint of the Valuation Range, that portion of subscriptions in excess of
the maximum purchase limitation will be refunded. In the event the
aggregate Purchase Price of Conversion Stock issued and sold is above the
midpoint of the Valuation Range, persons who have subscribed for the
maximum purchase limitation may be given the opportunity to increase their
subscriptions so as to purchase the maximum number of shares subject to the
availability of shares. The Bank will not otherwise notify subscribers of
any change in the number of shares of Conversion Stock offered.
D. Community Offering.
------------------
1. Any shares of Conversion Stock not purchased through the exercise
of Subscription Rights in the Subscription Offering may be sold in a
Community Offering, which may commence concurrently with the Subscription
Offering. Shares of Conversion Stock will be offered in the Community
Offering to the general public, giving preference to natural persons and
the trusts of natural persons (including individual retirement and Keogh
retirement accounts and personal trusts in which such natural persons have
substantial interests) who are permanent Residents of the Local Community.
The Community Offering may commence concurrently with or as soon as
practicable after the completion of the Subscription Offering and must be
completed within 45 days after the last day of the Subscription Offering,
unless extended by the Holding Company with the approval of the OTS. The
offering price of the Conversion Stock to the general public in the
Community Offering will be the same price paid for such stock by Eligible
Account Holders and other persons in the Subscription Offering. If
sufficient shares are not available to satisfy all orders in the Community
Offering, the shares available will be allocated by the Holding Company in
its discretion. The Holding Company shall have the right to accept or
reject orders in the Community Offering in whole or in part.
2. Orders accepted in the Community Offering shall be filled up to a
maximum of 2% of the Conversion Stock, and thereafter remaining shares
shall be allocated on an equal number of shares basis per order until all
orders have been filled.
3. The Conversion Stock to be offered in the Community Offering will
be offered and sold in a manner that will achieve the widest distribution
of the Conversion Stock.
E. Other Offering.
--------------
In the event a Community Offering does not appear feasible, the Bank
will immediately consult with the OTS to determine the most viable
alternative available to effect the completion of
A-10
the Conversion. Should no viable alternative exist, the Bank may terminate
the Conversion with the concurrence of the OTS.
F. Limitations Upon Purchases of Shares of Conversion Stock.
--------------------------------------------------------
The following additional limitations and exceptions shall apply to all
purchases of Conversion Stock:
1. No Person may purchase fewer than 25 shares of Conversion Stock
in the Conversion, to the extent such shares are available.
2. Purchases of Conversion Stock in the Community Offering by any
person, when aggregated with purchases by an Associate of that person, or a
group of persons Acting in Concert, shall not exceed 5% of the total
offering of shares of Conversion Stock, except that Tax-Qualified Employee
Stock Benefit Plans may purchase up to 10% of the total shares of
Conversion Stock to be issued in the Conversion, and shares to be held by
the Tax-Qualified Employee Stock Benefit Plans and attributable to a
participant thereunder shall not be aggregated with shares of Conversion
Stock purchased by such participant or any other purchaser of Conversion
Stock in the Conversion.
3. Officers and directors of the Bank and the Holding Company, and
Associates thereof, may not purchase in the aggregate more than 35% of the
shares of Conversion Stock issued in the Conversion, or such greater amount
as may be permitted under applicable legal limits.
4. Directors of the Holding Company and the Bank shall not be deemed
to be Associates or a group Acting in Concert with other directors solely
as a result of membership on the Board of Directors of the Holding Company
or the Bank or any of their subsidiaries.
5. Purchases of shares of Conversion Stock in the Conversion by any
person, when aggregated with purchases by an Associate of that person, or a
group of persons Acting in Concert, shall not exceed 5% of the total
offering of shares of Conversion Stock, except that Tax-Qualified Employee
Stock Benefit Plans may purchase up to 10% of the total shares of
Conversion Stock to be issued in the Conversion, and shares purchased by
the Tax-Qualified Employee Stock Benefit Plans and attributable to a
participant thereunder shall not be aggregated with shares purchased by
such participant or any other purchaser of Conversion Stock in the
Conversion.
Subject to any required regulatory approval and the requirements of
applicable laws and regulations, the Holding Company and the Bank may increase
or decrease any of the purchase limitations set forth herein at any time. Under
current regulatory authority, the Boards of Directors of the Holding Company and
the Bank may, in their discretion, increase the maximum purchase limitations in
the Subscription Offering and/or, if applicable, the Community Offering or other
offering up to 9.99%, provided that orders for shares exceeding 5% of the shares
to be issued in the Conversion shall not exceed, in the aggregate, 10% of the
shares to be issued in the Conversion. In the event that the individual purchase
limitation is increased after commencement of the Subscription and Community
Offerings, the Holding Company and the Bank shall permit any person who
subscribed for the maximum number of shares of Conversion Stock to purchase an
additional number of shares, such that such person shall be permitted to
subscribe for the then maximum number of shares permitted to be subscribed for
by such person, subject to the rights and preferences of any person who has
priority Subscription Rights. In the event that either the individual purchase
limitation or the number of shares of Conversion Stock to be sold in the
Conversion is decreased after commencement of the Subscription and Community
Offerings, the orders of any person who subscribed for the maximum number of
shares of Conversion Stock shall be decreased by the minimum amount necessary so
that such person shall be in compliance with the then maximum number of shares
permitted to be subscribed for by such person.
A-11
Each person purchasing Conversion Stock in the Conversion
shall be deemed to confirm that such purchase does not conflict with
the purchase limitations under the Plan or otherwise imposed by law,
rule or regulation. In the event that such purchase limitations are
violated by any person (including any Associate or group of persons
affiliated or otherwise Acting in Concert with such person), the
Holding Company shall have the right to purchase from such person at
the actual Purchase Price per share all shares acquired by such person
in excess of such purchase limitations or, if such excess shares have
been sold by such person, to receive the difference between the actual
Purchase Price per share paid for such excess shares and the price at
which such excess shares were sold by such person. This right of the
Holding Company to purchase such excess shares shall be assignable by
the Holding Company.
G. Restrictions on and Other Characteristics of Stock Being Sold.
-------------------------------------------------------------
1. Transferability.
---------------
Except as provided in Paragraph XIII. below,
Conversion Stock purchased by persons other than directors and
Officers of the Bank and directors and Officers of the Holding
Company will be transferable without restriction. Conversion
Stock purchased by such directors or Officers shall not be
sold for a period of one year from the date of Conversion
except for any sale of such shares (i) following the death of
the original purchaser or (ii) resulting from an exchange of
securities in a merger or acquisition approved by the
applicable regulatory authorities.
The Conversion Stock issued by the Holding Company to
such directors and Officers shall bear the following legend
giving appropriate notice of the one-year holding period
restriction:
"The shares of stock evidenced by this Certificate
are restricted as to transfer for a period of one
year from the date of this Certificate pursuant to
applicable regulations of the Office of Thrift
Supervision of the United States Department of the
Treasury. Except in the event of the death of the
registered holder, the shares represented by this
Certificate may not be sold prior thereto without a
legal opinion of counsel for the Holding Company that
said sale is permissible under the provisions of
applicable laws and regulations."
In addition, the Holding Company shall give
appropriate instructions to the transfer agent for the Holding
Company Stock with respect to the applicable restrictions
relating to the transfer of restricted stock. Any shares of
Holding Company Stock subsequently issued as a stock dividend,
stock split or otherwise, with respect to any such restricted
stock, shall be subject to the same holding period
restrictions for such directors and Officers as may be then
applicable to such restricted stock.
2. Repurchase and Dividend Rights.
------------------------------
Pursuant to present regulations, except as otherwise
permitted by the OTS, the Holding Company may not, for a
period of three years from the date of Conversion, repurchase
Holding Company Stock from any person, with the exception of
(i) repurchases on a pro rata basis pursuant to offers
approved by the OTS and made to all stockholders, (ii)
repurchases of qualifying shares of directors or, (iii) unless
prohibited by the OTS, repurchases of shares to fund employee
stock benefit plans of the Holding Company or the Bank. Upon
10 days' written notification to the OTS Regional Director for
the Converted Bank and the Chief Counsel of the Corporate and
Securities Division of the OTS, however, the Holding Company
may make open market repurchases of outstanding Holding
Company Stock, provided that (i) such Regional Director and
Chief Counsel do not object based on a determination that (a)
the repurchases would materially adversely affect the
financial condition of the Converted Bank, (b) the information
submitted by the Converted Bank is insufficient upon which to
base a conclusion as to whether the Converted Bank's financial
condition would be materially
A-12
adversely affected, or (c) the Converted Bank does not
demonstrate a valid purpose for the repurchases. Except as
otherwise permitted by the OTS, (i) no repurchases may occur
in the first year following the Conversion; (ii) any
repurchases in the second and third years following the
Conversion must be part of an open-market stock repurchase
program that allows no more than five percent (5%) of the
outstanding Holding Company Stock to be purchased during any
12 month period; and (iii) any repurchases within the first
three years following the Conversion must not cause the
Converted Bank to become "undercapitalized," as defined
pursuant to 12 C.F.R. (S)565.4 or a successor regulation.
Present regulations also provide that the Converted
Bank may not declare or pay a cash dividend on or repurchase
any of its Capital Stock if the result thereof would be to
reduce the regulatory capital of the Converted Bank below the
amount required for the Liquidation Account. Further, any
dividend declared or paid on, or repurchase of, the Capital
Stock shall be in compliance with the Rules and Regulations of
the OTS, or other applicable regulations.
The above limitations shall not preclude payment of
dividends on, or repurchases of, Holding Company Stock in the
event applicable federal regulatory limitations are
liberalized subsequent to the Conversion.
3. Voting Rights.
-------------
After Conversion, holders of Savings Accounts and
obligors on loans will not have voting rights in the Converted
Bank. Exclusive voting rights with respect to the Holding
Company shall be vested in the holders of Holding Company
Stock, and the Holding Company will have exclusive voting
rights with respect to the Capital Stock. Each stockholder of
the Holding Company will be entitled to vote on any matters
coming before the stockholders of the Holding Company for
consideration and will be entitled to one vote for each share
of stock owned by said stockholder.
4. Purchases by Officers, Directors and Associates
-----------------------------------------------
Following Conversion.
--------------------
Without the prior approval of the OTS, Officers and
directors of the Converted Bank and Officers and directors of
the Holding Company, and their Associates, shall be prohibited
for a period of three years following completion of the
Conversion from purchasing outstanding shares of Holding
Company Stock, except from a broker or dealer registered with
the SEC. Notwithstanding this restric tion, negotiated
transactions involving more than 1% of the total outstanding
shares of Holding Company Stock and purchases made and shares
held by a Tax-Qualified Employee Stock Benefit Plan or
Non-Tax-Qualified Employee Stock Benefit Plan which may be
attributable to Officers or directors may be made without OTS
permission or the use of a broker or dealer.
H. Mailing of Offering Materials and Collation of Subscriptions.
------------------------------------------------------------
The sale of all shares of Conversion Stock offered pursuant to
the Plan must be completed within 24 months after approval of the Plan
at the Special Meeting. After approval of the Plan by the OTS and the
declaration of the effectiveness of the Subscription and Community
Prospectus by the SEC, the Holding Company shall distribute such
Subscription and Community Prospectus and Order Forms for the purchase
of shares in accordance with the terms of the Plan.
The recipient of an Order Form will be provided neither fewer
than 20 days nor more than 45 days from the date of mailing, unless
extended, to complete, execute and return properly the Order Form to
the Holding Company or the Bank. Self-addressed, postage paid return
envelopes will accompany these forms when mailed. The Bank or Holding
Company will collate the returned executed Order Forms upon completion
of the Subscription Offering. Failure of any eligible subscriber to
return a properly completed and executed
A-13
Order Form within the prescribed time limits shall be deemed a waiver
and a release by such person of any rights to purchase shares of
Conversion Stock hereunder.
The sale of all shares of Conversion Stock shall be completed
within 45 days after the last day of the Subscription Offering unless
extended by the Holding Company and the Bank with the approval of the
OTS.
I. Method of Payment.
-----------------
Payment for all shares of Conversion Stock subscribed for in
the Subscription and Community Offerings must be received in full by
the Bank or the Holding Company, together with properly completed and
executed Order Forms, indicating thereon the number of shares being
subscribed for and such other information as may be required thereon,
on or prior to the expiration date specified on the Order Form, unless
such date is extended by the Holding Company and the Bank; provided,
however, that payments by Tax-Qualified Employee Stock Benefit Plans
for Conversion Stock may be made to the Bank concurrently with the
completion of the Conversion.
Payment for all shares of Conversion Stock may be made in cash
(if delivered in person) or by check or money order, or, if the
subscriber has a Savings Account in the Bank (including a certificate
of deposit), the subscriber may authorize the Bank to charge the
subscriber's Savings Account for the purchase amount. The Bank shall
pay interest at not less than the passbook rate on all amounts paid in
cash or by check or money order to purchase shares of Conversion Stock
in the Subscription and Community Offerings from the date payment is
received until the Conversion is completed or terminated. The Bank
shall not knowingly loan funds or otherwise extend credit to any person
for the purpose of purchasing Conversion Stock.
If a subscriber authorizes the Bank to charge its Savings
Account, the funds will remain in the subscriber's Savings Account and
will continue to earn interest, but may not be used by the subscriber
until all Conversion Stock has been sold or the Conversion is
terminated, whichever is earlier. The withdrawal will be given effect
only concurrently with the sale of all shares of Conversion Stock in
the Conversion and only to the extent necessary to satisfy the
subscription at a price equal to the Purchase Price. The Bank will
allow subscribers to purchase shares of Conversion Stock by withdrawing
funds from certificate accounts without the assessment of early
withdrawal penalties. In the case of early withdrawal of only a portion
of such account, the certificate evidencing such account shall be
cancelled if the remaining balance of the account is less than the
applicable minimum balance requirement. In that event, the remaining
balance will earn interest at the passbook rate. This waiver of the
early withdrawal penalty is applicable only to withdrawals made in
connection with the purchase of Conversion Stock under the Plan.
Tax-Qualified Employee Stock Benefit Plans may subscribe for
shares by submitting an Order From, and in the case of an employee
stock ownership plan, together with evidence of a loan commitment from
the Holding Company or an unrelated financial institution for the
purchase of the shares of Conversion Stock, during the Subscription
Offering and by making payment for the shares of Conversion Stock on
the date of the closing of the Conversion.
J. Undelivered, Defective or Late Order Forms; Insufficient
--------------------------------------------------------
Payment.
-------
In the event an Order Form (i) is not delivered and is
returned to the Holding Company or the Bank by the United States Postal
Service (or the Holding Company or the Bank is unable to locate the
addressee); (ii) is not received by the Holding Company or the Bank, or
is received by the Holding Company or the Bank after termination of the
date specified thereon; (iii) is defectively completed or executed; or
(iv) is not accompanied by the total required payment for the shares of
Conversion Stock subscribed for (including cases in which the
subscribers' Savings Accounts are insufficient to cover the authorized
withdrawal for the required payment), the Subscription Rights of the
person to whom such rights have been granted will not be honored
A-14
and will be treated as though such person failed to return the
completed Order Form within the time period specified therein.
Alternatively, the Holding Company or the Bank may, but will not be
required to, waive any irregularity relating to any Order Form or
require the submission of a corrected Order Form or the remittance of
full payment for subscribed shares of Conversion Stock by such date as
the Holding Company or the Bank may specify. Subscription orders, once
tendered, cannot be revoked. The Holding Company's and the Bank's
interpretation of the terms and conditions of this Plan and
acceptability of the Order Forms will be final and conclusive.
K. Members in Non-Qualified States or in Foreign Countries.
-------------------------------------------------------
The Holding Company will make reasonable efforts to comply
with the securities laws of all states in the United States in which
persons entitled to subscribe for Conversion Stock pursuant to the Plan
reside. However, no such person will be offered or receive any
Conversion Stock under this Plan who resides in a foreign country or
who resides in a state of the United States with respect to which any
or all of the following apply: (i) a small number of persons otherwise
eligible to subscribe for shares of Conversion Stock under this Plan
reside in such state or foreign country; (ii) the granting of
Subscription Rights or the offer or sale of shares of Conversion Stock
to such person would require the Holding Company or the Bank or their
employees to register, under the securities laws of such state, as a
broker, dealer, salesman or agent or to register or otherwise qualify
its securities for sale in such state or foreign country; and (iii)
such registration qualification would be impracticable for reasons of
cost or otherwise. No payments will be made in lieu of the granting of
Subscription Rights to any such person.
L. Sales Commissions.
-----------------
Sales commissions may be paid as determined by the Boards of
Directors of the Bank and the Holding Company or their designees to
securities dealers assisting subscribers in making purchases of
Conversion Stock in the Subscription Offering or in the Community
Offering, if the securities dealer is named by the subscriber on the
Order Form. In addition, a sales commission may be paid to a securities
dealer for advising and consulting with respect to, or for managing the
sale of Conversion Stock in, the Subscription Offering, the Community
Offering or any other offering.
IX. CHARTER AND BYLAWS.
As part of the Conversion, a federal stock charter and bylaws will be
adopted to authorize the Converted Bank to operate as a federal capital stock
savings Bank. By approving the Plan, the Members of the Bank will thereby
approve amending the Bank's existing federal mutual charter and bylaws to read
in the form of a federal stock charter and bylaws. Prior to completion of the
Conversion, the proposed federal stock charter and bylaws may be amended in
accordance with the provisions and limitations for amending the Plan under
Paragraph XIV. below. The effective date of the amendment of the Bank's federal
mutual charter and bylaws to read in the form of a federal stock charter and
bylaws shall be the date of the issuance of the Conversion Stock, which shall be
the date of consummation of the Conversion.
X. REGISTRATION AND MARKET MAKING.
In connection and concurrently with the Conversion, the Holding Company
shall register the Holding Company Stock with the SEC pursuant to the Securities
Exchange Act of 1934, as amended, and shall undertake not to deregister the
Holding Company Stock for a period of three years thereafter.
The Holding Company shall use its best efforts to encourage and assist
various Market Makers to establish and maintain a market for the Holding Company
Stock. The Holding Company shall also use its best efforts to have the
A-15
Holding Company Stock quoted on the National Association of Securities Dealers,
Inc. Automated Quotation System or listed on a national or regional securities
exchange.
XI. STATUS OF SAVINGS ACCOUNTS AND LOANS SUBSEQUENT TO CONVERSION.
All Savings Accounts in the Bank will retain the same status after
Conversion as these accounts had prior to Conversion. Subject to Paragraph
VIII.I. hereof, each holder of a Savings Account in the Bank shall retain,
without payment, a withdrawable Savings Account or Savings Accounts in the
Converted Bank, equal in dollar amount and on the same terms and conditions as
in effect prior to Conversion. All Savings Accounts will continue to be insured
by the Savings Association Insurance Fund of the Federal Deposit Insurance
Corporation up to the applicable limits of insurance coverage. All loans shall
retain the same status after Conversion as these loans had prior to Conversion.
After Conversion, holders of Savings Accounts and obligors on loans of the Bank
will not have voting rights in the Converted Bank. Exclusive voting rights with
respect to the Holding Company shall be vested in the holders of the Conversion
Stock issued by the Holding Company, and the Holding Company will have exclusive
voting rights with respect to the Converted Bank's Capital Stock.
XII. LIQUIDATION ACCOUNT.
After the Conversion, holders of Savings Accounts will not be entitled
to share in the residual assets after liquidation of the Converted Bank.
However, pursuant to applicable regulations, the Bank shall, at the time of the
Conversion, establish a Liquidation Account in an amount equal to its regulatory
capital as of the date of the latest statement of financial condition contained
in the final prospectus to be used in connection with the Conversion. The
function of the Liquidation Account is to establish a priority on liquidation,
and, except as provided in Paragraph VIII.G.2. above, the existence of the
Liquidation Account shall not operate to restrict the use or application of any
of the net worth accounts of the Converted Bank.
The Liquidation Account shall be maintained by the Converted Bank
subsequent to Conversion for the benefit of Eligible Account Holders and
Supplemental Eligible Account Holders who retain their Savings Accounts in the
Converted Bank. Each Eligible Account Holder and Supplemental Eligible Account
Holder shall, with respect to each Savings Account held, have a related inchoate
interest in a portion of the Liquidation Account ("subaccount balance").
The initial subaccount balance for a Savings Account held by an
Eligible Account Holder and/or a Supplemental Eligible Account Holder shall be
determined by multiplying the opening balance in the Liquidation Account by a
fraction of which the numerator is the amount of the qualifying deposit in the
related Savings Account and the denominator is the total amount of the
qualifying deposits of all Eligible Account Holders and Supplemental Eligible
Account Holders in the Bank. Such initial subaccount balance shall not be
increased but shall be subject to downward adjustment as provided below.
If the deposit balance in any Savings Account of an Eligible Account
Holder or Supplemental Eligible Account Holder to which the subaccount relates
at the close of business on any annual closing date subsequent to the
Eligibility Record Date or Supplemental Eligibility Record Date is less than the
lesser of (i) the deposit balance in such Savings Account at the close of
business on any annual closing date subsequent to the Eligibility Record Date or
the Supplemental Eligibility Record Date, or (ii) the amount of the Qualifying
Deposit in such Savings Account on the Eligibility Record Date or the
Supplemental Eligibility Record Date, then the subaccount balance for such
Savings Account shall be adjusted by reducing such subaccount balance in an
amount proportionate to the reduction in such deposit balance. In the event of a
downward adjustment, the subaccount balance shall not be subsequently increased,
notwithstanding any increase in the deposit balance of the related Savings
Account. If any such Savings Account is closed, the related subaccount balance
shall be reduced to zero.
In the event of a complete liquidation of the Converted Bank (and only
in such event), each Eligible Account Holder and Supplemental Eligible Account
Holder shall be entitled to receive a liquidation distribution from the
A-16
Liquidation Account in the amount of the then-current adjusted subaccount
balances for Savings Accounts then held before any liquidation distribution may
be made to stockholders. No merger, consolidation, sale of bulk assets or
similar combination or transaction with another institution insured by the
Federal Deposit Insurance Corporation shall be considered to be a complete
liquidation for these purposes. In such transactions, the Liquidation Account
shall be assumed by the surviving institution.
XIII. RESTRICTIONS ON ACQUISITION OF HOLDING COMPANY.
A. Present regulations provide that for a period of three
years following completion of the Conversion, no person (i.e., an
individual, a group acting in concert, a corporation, a partnership, an
association, a joint stock company, a trust or any unincorporated
organization or similar company, a syndicate or any other group formed
for the purpose of acquiring, holding or disposing of securities of an
insured institution or its holding company) shall directly, or
indirectly, offer to purchase or actually acquire the beneficial
ownership of more than 10% of any class of Holding Company Stock
without the prior approval of the OTS. However, approval is not
required for purchases directly from the Holding Company or
underwriters or a selling group acting on its behalf with a view
towards public resale, or for purchases not exceeding 1% per annum of
the shares outstanding, or for the acquisition of securities by one or
more Tax-Qualified Employee Stock Benefit Plans of the Holding Company
or the Converted Bank, provided that the plan or plans do not have
beneficial ownership in the aggregate of more than 25% of any class of
Holding Company Stock. Civil penalties may be imposed by the OTS for
willful violation or assistance of any violation. Where any person,
directly or indirectly, acquires beneficial ownership of more than 10%
of any class of Holding Company Stock within such three-year period,
without the prior approval of the OTS, Holding Company Stock
beneficially owned by such person in excess of 10% shall not be counted
as shares entitled to vote and shall not be voted by any person or
counted as voting shares in connection with any matter submitted to the
stockholders for a vote.
B. The Holding Company may provide in its Articles of
Incorporation a provision that, for a period of five years following
the date of the completion of the Conversion, no person shall directly
or indirectly offer to acquire or actually acquire the beneficial
ownership of more than 10% of any class of Holding Company Stock except
with respect to purchases by one or more Tax-Qualified Employee Stock
Benefit Plans of the Holding Company or Converted Bank. The Holding
Company may provide in its Articles of Incorporation for such other
provisions affecting the acquisition of Holding Company Stock as shall
be determined by its Board of Directors.
XIV. INTERPRETATION AND AMENDMENT OR TERMINATION OF THE PLAN.
The Bank's Board of Directors shall have the sole discretion to
interpret and apply the provisions of the Plan to particular facts and
circumstances and to make all determinations necessary or desirable to implement
such provisions, including but not limited to matters with respect to giving
preference to natural persons and trusts of natural persons who are permanent
Residents of the Bank's Local Community, and any and all interpretations,
applications and determinations made by the Board of Directors in good faith and
on the basis of such information and assistance as was then reasonably available
for such purpose shall be conclusive and binding upon the Bank and its members
and subscribers in the Subscription and Community Offerings, subject to the
authority of the OTS.
If deemed necessary or desirable, the Plan may be substantively amended
at any time prior to submission of the Plan and proxy materials to the Members
by a two-thirds vote of the Bank's Board of Directors. After submission of the
Plan and proxy materials to the Members, the Plan may be amended by a two-thirds
vote of the Bank's Board of Directors at any time prior to the Special Meeting
and at any time following such Special Meeting with the concurrence of the OTS.
In its discretion, the Board of Directors may modify or terminate the Plan upon
the order of the regulatory authorities without a resolicitation of proxies or
another Special Meeting.
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In the event that mandatory new regulations pertaining to conversions
are adopted by the OTS or any successor agency prior to the completion of the
Conversion, the Plan will be amended to conform to the new mandatory regulations
without a resolicitation of proxies or another Special Meeting. In the event
that new conversion regulations adopted by the OTS or any successor agency prior
to completion of the Conversion contain optional provisions, the Plan may be
amended to utilize such optional provisions at the discretion of the Board of
Directors without a resolicitation of proxies or another Special Meeting.
By adoption of the Plan, the Bank's Members authorize the Board of
Directors to amend and/or terminate the Plan under the circumstances set forth
above.
XV. EXPENSES OF THE CONVERSION.
The Holding Company and the Bank will use their best efforts to assure
that expenses incurred in connection with the Conversion shall be reasonable.
XVI. CONTRIBUTIONS TO TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLANS.
The Holding Company and the Converted Bank may make scheduled
discretionary contributions to their Tax-Qualified Employee Stock Benefit Plans,
provided such contributions do not cause the Converted Bank to fail to meet its
then-applicable regulatory capital requirements.
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EXHIBIT B
NEWPORT FEDERAL SAVINGS BANK
FEDERAL STOCK CHARTER
SECTION 1. CORPORATE TITLE. The full corporate title of the savings bank is
Newport Federal Savings Bank (the "savings bank").
SECTION 2. OFFICE. The home office shall be located at 200 Olivia Drive, in the
City of Newport, in the State of Arkansas.
SECTION 3. DURATION. The duration of the savings bank is perpetual.
SECTION 4. PURPOSE AND POWERS. The purpose of the savings bank is to pursue any
or all of the lawful objectives of a Federal savings bank chartered under
Section 5 of the Home Owners' Loan Act and to exercise all of the express,
implied, and incidental powers conferred thereby and by all acts amendatory
thereof and supplemental thereto, subject to the Constitution and laws of the
United States as they are now in effect, or as they may hereafter be amended,
and subject to all lawful and applicable rules, regulations, and orders of the
Office of Thrift Supervision ("Office").
SECTION 5. CAPITAL STOCK. The total number of shares of all classes of the
capital stock which the savings bank has authority to issue is 12,000,000 of
which 9,000,000 shares shall be common stock, of par value of $1.00 per share
and of which 3,000,000 shares shall be serial preferred stock of par value of
$1.00 per share. The shares may be issued from time to time as authorized by the
board of directors without approval of its stockholders except as otherwise
provided in this Section 5 or to the extent that such approval is required by
governing law, rule, or regulation. The consideration for the issuance of the
shares shall be paid in full before their issuance and shall not be less than
the par value. Neither promissory notes nor future services shall constitute
payment or part payment for the issuance of shares of the savings bank. The
consideration for the shares shall be cash, tangible or intangible property (to
the extent direct investment in such property would be permitted), labor, or
services actually performed for the savings bank, or any combination of the
foregoing. In the absence of actual fraud in the transaction, the value of such
property, labor, or services, as determined by the board of directors of the
savings bank, shall be conclusive. Upon payment of such consideration, such
shares shall be deemed to be fully paid and nonassessable. In the case of a
stock dividend, that part of the surplus of the savings bank which is
transferred to stated capital upon the issuance of shares as a share dividend
shall be deemed to be the consideration for their issuance.
Except for shares issuable in connection with the conversion of the
savings bank from the mutual to the stock form of capitalization, no shares of
capital stock (including shares issuable upon conversion, exchange, or exercise
of other securities) shall be issued, directly or indirectly, to officers,
directors, or controlling persons of the savings bank other than as part of a
general public offering or as qualifying shares to a director, unless their
issuance or the plan under which they would be issued has been approved by a
majority of the total votes eligible to be cast at a legal meeting.
Nothing contained in this Section 5 (or in any supplementary sections
hereto) shall entitle the holders of any class or series of capital stock to
vote as a separate class or series or to more than one vote per share, provided,
that this restriction on voting separately by class or series shall not apply:
(i) To any provision which would authorize the holders of preferred
stock, voting as a class or series, to elect some members of the board of
directors, less than a majority thereof, in the event of default in the payment
of dividends on any class or series of preferred stock;
(ii) To any provision which would require the holders of preferred
stock, voting as a class or series, to approve the merger or consolidation of
the savings bank with another corporation or the sale, lease, or conveyance
(other than
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by mortgage or pledge) of properties or business in exchange for securities of a
corporation other than the savings bank if the preferred stock is exchanged for
securities of such other corporation: Provided, That no provision may require
such approval for transactions undertaken with the assistance or pursuant to the
direction of the Office, the Federal Deposit Insurance Corporation, or the
Resolution Trust Corporation;
(iii) To any amendment which would adversely change the specific terms
of any class or series of capital stock as set forth in this Section 5 (or in
any supplementary sections hereto), including any amendment which would create
or enlarge any class or series ranking prior thereto in rights and preferences.
An amendment which increases the number of authorized shares of any class or
series of capital stock, or substitutes the surviving savings bank in a merger
or consolidation for the savings bank, shall not be considered to be such an
adverse change.
A description of the different classes and series (if any) of the
savings bank's capital stock and a statement of the designations, and the
relative rights, preferences, and limitations of the shares of each class of and
series (if any) of capital stock are as follows:
A. COMMON STOCK. Except as provided in this Section 5 (or in any
supplementary sections thereto), the holders of common stock shall exclusively
possess all voting power. Each holder of shares of common stock shall be
entitled to one vote for each share held by such holder.
Whenever there shall have been paid, or declared and set aside for
payment, to the holders of the outstanding shares of any class of stock having
preference over the common stock as to the payment of dividends, the full amount
of dividends and of sinking fund, retirement fund, or other retirement payments,
if any, to which such holders are respectively entitled in preference to the
common stock, then dividends may be paid on the common stock and on any class or
series of stock entitled to participate therewith as to dividends out of any
assets legally available for the payment of dividends.
In the event of any liquidation, dissolution, or winding up of the
savings bank, the holders of the common stock (and the holders of any class or
series of stock entitled to participate with the common stock in the
distribution of assets) shall be entitled to receive, in cash or in kind, the
assets of the savings bank available for distribution remaining after: (i)
payment or provision for payment of the savings bank's debts and liabilities;
(ii) distributions or provisions for distributions in settlement of its
liquidation account; and (iii) distributions or provisions for distributions to
holders of any class or series of stock having preference over the common stock
in the liquidation, dissolution, or winding up of the savings bank. Each share
of common stock shall have the same relative rights as and be identical in all
respects with all the other shares of common stock.
B. PREFERRED STOCK. The savings bank may provide in supplementary
sections to its charter for one or more classes of preferred stock, which shall
be separately identified. The shares of any class may be divided into and issued
in series, with each series separately designated so as to distinguish the
shares thereof from the shares of all other series and classes. The terms of
each series shall be set forth in a supplementary section to the charter. All
shares of the same class shall be identical except as to the following relative
rights and preferences, as to which there may be variations between different
series:
(a) The distinctive serial designation and the number of shares
constituting such series;
(b) The dividend rate or the amount of dividends to be paid on the
shares of such series, whether dividends shall be cumulative and, if so, from
which date(s) the payment date(s) for dividends, and the participating or other
special rights, if any, with respect to dividends;
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(c) The voting powers, full or limited, if any, of shares of such
series;
(d) Whether the shares of such series shall be redeemable and, if so,
the price(s) at which, and the terms and conditions on which, such shares may be
redeemed;
(e) The amount(s) payable upon the shares of such series in the event
of voluntary or involuntary liquidation, dissolution, or winding up of the
savings bank;
(f) Whether the shares of such series shall be entitled to the benefit
of a sinking or retirement fund to be applied to the purchase or redemption of
such shares, and if so entitled, the amount of such fund and the manner of its
application, including the price(s) at which such shares may be redeemed or
purchased through the application of such fund;
(g) Whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes of stock of the savings
bank and, if so, the conversion price(s) or the rate(s) of exchange, and the
adjustments thereof, if any, at which such conversion or exchange may be made,
and any other terms and conditions of such conversion or exchange;
(h) The price or other consideration for which the shares of such
series shall be issued; and
(i) Whether the shares of such series which are redeemed or converted
shall have the status of authorized but unissued shares of serial preferred
stock and whether such shares may be reissued as shares of the same or any other
series of serial preferred stock.
Each share of each series of serial preferred stock shall have the same
relative rights as and be identical in all respects with all the other shares of
the same series.
The board of directors shall have authority to divide, by the adoption
of supplementary charter sections, any authorized class of preferred stock into
series, and, within the limitations set forth in this section and the remainder
of this charter, fix and determine the relative rights and preferences of the
shares of any series so established.
Prior to the issuance of any preferred shares of a series established
by a supplementary charter section adopted by the board of directors, the
savings bank shall file with the Secretary to the Office a dated copy of that
supplementary section of this charter establishing and designating the series
and fixing and determining the relative rights and preferences thereof.
SECTION 6. PREEMPTIVE RIGHTS. Holders of the capital stock of the savings bank
shall not be entitled to preemptive rights with respect to any shares of the
savings bank which may be issued.
SECTION 7. DIRECTORS. The savings bank shall be under the direction of a board
of directors. The authorized number of directors, as stated in the savings
bank's bylaws, shall not be fewer than five or more than fifteen except when a
greater or lesser number is approved by the Director of the Office.
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SECTION 8. AMENDMENT OF CHARTER. Except as provided in Section 5, no amendment,
addition, alteration, change, or repeal of this charter shall be made, unless
such is proposed by the board of directors of the savings bank, approved by the
shareholders by a majority of the votes eligible to be cast at a legal meeting,
unless a higher vote is otherwise required, and approved or preapproved by the
Office.
SECTION 9. LIQUIDATION ACCOUNT. Pursuant to the requirements of the Office's
regulations (12 C.F.R. Subchapter D), the savings bank shall establish and
maintain a liquidation account for the benefit of its savings account holders as
of December 31, 1995 and September 30, 1997 ("eligible savers"). In the event of
a complete liquidation of the savings bank, it shall comply with such
regulations with respect to the amount and the priorities on liquidation of each
of the savings bank's eligible savers' inchoate interest in the liquidation
account, to the extent it is still in existence; provided, that an eligible
savers' inchoate interest in the liquidation account shall not entitle such
eligible saver to any voting rights at meetings of the savings bank's
stockholders.
Attest: By:
---------------------------- -------------------------------------
Brad Snider
Secretary President and Chief Executive Officer
Newport Federal Savings Bank Newport Federal Savings Bank
Attest: By:
---------------------------- -------------------------------------
Secretary Director of the Office of Thrift
Office of Thrift Supervision Supervision
Effective Date: .
---------------------------
B-4
EXHIBIT C
BYLAWS
NEWPORT FEDERAL SAVINGS BANK
ARTICLE I - HOME OFFICES
The home office of the savings bank shall be 200 Olivia Drive, in the City
of Newport in the State of Arkansas.
ARTICLE II - SHAREHOLDERS
SECTION 1. PLACE OF MEETINGS. All annual and special meetings of
shareholders shall be held at the home office of the savings bank or at such
other place in the State of Arkansas in which the principal place of business of
the savings bank is located as the board of directors may determine.
SECTION 2. ANNUAL MEETING. A meeting of the shareholders of the savings
bank for the election of directors and for the transaction of any other business
of the savings bank shall be held annually within 150 days after the end of the
savings bank's fiscal year.
SECTION 3. SPECIAL MEETINGS. Special meetings of the shareholders for any
purpose or purposes, unless otherwise prescribed by the regulations of the
Office of Thrift Supervision ("Office"), may be called at any time by the
chairman of the board, the president, or a majority of the board of directors,
and shall be called by the chairman of the board, the president, or the
secretary upon the written request of the holders of not less than one-tenth of
all of the outstanding capital stock of the savings bank entitled to vote at the
meeting. Such written request shall state the purpose or purposes of the meeting
and shall be delivered to the home office of the savings bank addressed to the
chairman of the board, the president, or the secretary.
SECTION 4. CONDUCT OF MEETINGS. Annual and special meetings shall be
conducted in accordance with rules and procedures adopted by the board of
directors. The board of directors shall designate, when present, either the
chairman of the board or president to preside at such meetings.
SECTION 5. NOTICE OF MEETINGS. Written notice stating the place, day, and
hour of the meeting and the purpose(s) for which the meeting is called shall be
delivered not fewer than 20 nor more than 50 days before the date of the
meeting, either personally or by mail, by or at the direction of the chairman of
the board, the president, or the secretary, or the directors calling the
meeting, to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the mail,
addressed to the shareholder at the address as it appears on the stock transfer
books or records of the savings bank as of the record date prescribed in Section
6 of this Article II with postage prepaid. When any shareholders' meeting,
either annual or special, is adjourned for 30 days or more, notice of the
adjourned meeting shall be given as in the case of an original meeting. It shall
not be necessary to give any notice of the time and place of any meeting
adjourned for less than 30 days or of the business to be transacted at the
meeting, other than an announcement at the meeting at which such adjournment is
taken.
SECTION 6. FIXING OF RECORD DATE. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment, or shareholders entitled to receive payment of any dividend, or
in order to make a determination of shareholders for any other proper purpose,
the board of directors shall fix in advance a date as the record date for any
such determination of shareholders. Such date in any case shall be not more than
60 days and, in case of a meeting of shareholders, not fewer than 10 days prior
to the date on which the particular action, requiring such determination of
shareholders, is to be taken. When a determination of shareholders entitled to
vote at
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any meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment.
SECTION 7. VOTING LISTS. At least 20 days before each meeting of the
shareholders, the officer or agent having charge of the stock transfer books for
shares of the savings bank shall make a complete list of the shareholders
entitled to vote at such meeting, or any adjournment, arranged in alphabetical
order, with the address and the number of shares held by each. This list of
shareholders shall be kept on file at the home office of the savings bank and
shall be subject to inspection by any shareholder at any time during usual
business hours for a period of 20 days prior to such meeting. Such list shall
also be produced and kept open at the time and place of the meeting and shall be
subject to inspection by any shareholder during the entire time of the meeting.
The original stock transfer book shall constitute prima facie evidence of the
shareholders entitled to examine such list or transfer books or to vote at any
meeting of shareholders.
In lieu of making the shareholder list available for inspection by
shareholders as provided in the preceding paragraph, the board of directors may
perform such acts as required by paragraphs (a) and (b) of Rule 14a-7 of the
General Rules and Regulations under the Securities Exchange Act of 1934, as may
be duly requested in writing, with respect to any matter which may be properly
considered at a meeting of stockholders, by any stockholder who is entitled to
vote on such matter and who shall defray the reasonable expenses to be incurred
by the savings bank in performance of the act or acts required.
SECTION 8. QUORUM. A majority of the outstanding shares of the savings bank
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. If less than a majority of the outstanding shares
is represented at a meeting, a majority of the shares so represented may adjourn
the meeting from time to time without further notice. At such adjourned meeting
at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to constitute less than a quorum. If a quorum is present, the
affirmative vote of a majority of the shares represented at the meeting and
entitled to vote on the subject matter shall be the act of stockholders, unless
the vote of a greater number of stockholders voting together or voting by
classes is required by law or the charter. Directors, however, are elected by a
plurality of the votes cast at an election of directors.
SECTION 9. PROXIES. At all meetings of shareholders, a shareholder may vote
by proxy executed in writing by the shareholder or by his or her duly authorized
attorney in fact. Proxies may be given telephonically or electronically as long
as the holder uses a procedure for verifying the identity of the stockholder.
Proxies solicited on behalf of the management shall be voted as directed by the
shareholder or, in the absence of such direction, as determined by a majority of
the board of directors. No proxy shall be valid more than eleven months from the
date of its execution except for a proxy coupled with an interest.
SECTION 10. VOTING OF SHARES IN THE NAME OF TWO OR MORE PERSONS. When
ownership stands in the name of two or more persons, in the absence of written
directions to the savings bank to the contrary, at any meeting of the
shareholders of the savings bank, any one or more of such shareholders may cast,
in person or by proxy, all votes to which such ownership is entitled. In the
event an attempt is made to cast conflicting votes, in person or by proxy, by
the several persons in whose names shares of stock stand, the vote or votes to
which those persons are entitled shall be cast as directed by a majority of
those holding such stock and present in person or by proxy at such meeting, but
no votes shall be cast for such stock if a majority cannot agree.
SECTION 11. VOTING OF SHARES OF CERTAIN HOLDERS. Shares standing in the
name of another corporation may be voted by any officer, agent, or proxy as the
bylaws of such corporation may prescribe, or, in the absence of such provision,
as the board of directors of such corporation may determine. Shares held by an
administrator, executor, guardian, or conservator may be voted by him or her,
either in person or by proxy, without a transfer of such shares into his or her
name. Shares standing in the name of a trustee may be voted by him or her,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him or her, without a transfer of such shares into his or her name.
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Shares standing in the name of a receiver may be voted by such receiver, and
shares held by or under the control of a receiver may be voted by such receiver
without the transfer into his or her name if authority to do so is contained in
an appropriate order of the court or other public authority by which such
receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither treasury shares of its own stock held by the savings bank nor
shares held by another corporation, if a majority of the shares entitled to vote
for the election of directors of such other corporation are held by the savings
bank, shall be voted at any meeting or counted in determining the total number
of outstanding shares at any given time for purposes of any meeting.
SECTION 12. CUMULATIVE VOTING. Unless otherwise provided in the savings
bank's charter, every shareholder entitled to vote at an election for directors
shall have the right to vote, in person or by proxy, the number of shares owned
by the shareholder for as many persons as there are directors to be elected and
for whose election the shareholder has a right to vote, or to cumulate the votes
by giving one candidate as many votes as the number of such directors to be
elected multiplied by the number of shares shall equal or by distributing such
votes on the same principle among any number of candidates.
SECTION 13. INSPECTORS OF ELECTION. In advance of any meeting of
shareholders, the board of directors may appoint any persons other than nominees
for office as inspectors of election to act at such meeting or any adjournment.
The number of inspectors shall be either one or three. Any such appointment
shall not be altered at the meeting. If inspectors of election are not so
appointed, the chairman of the board or the president may, or on the request of
not fewer than 10 percent of the votes represented at the meeting shall, make
such appointment at the meeting. If appointed at the meeting, the majority of
the votes present shall determine whether one or three inspectors are to be
appointed. In case any person appointed as inspector fails to appear or fails or
refuses to act, the vacancy may be filled by appointment by the board of
directors in advance of the meeting or at the meeting by the chairman of the
board or the president.
Unless otherwise prescribed by regulations of the Office, the duties of
such inspectors shall include: determining the number of shares and the voting
power of each share, the shares represented at the meeting, the existence of a
quorum, and the authenticity, validity, and effect of proxies; receiving votes,
ballots, or consents; hearing and determining all challenges and questions in
any way arising in connection with the rights to vote; counting and tabulating
all votes or consents; determining the result; and such acts as may be proper to
conduct the election or vote with fairness to all shareholders.
SECTION 14. NOMINATING COMMITTEE. The board of directors shall act as a
nominating committee for selecting the management nominees for election as
directors. Except in the case of a nominee substituted as a result of the death
or other incapacity of a management nominee, the nominating committee shall
deliver written nominations to the secretary at least 20 days prior to the date
of the annual meeting. Upon delivery, such nominations shall be posted in a
conspicuous place in each office of the savings bank. No nominations for
directors except those made by the nominating committee shall be voted upon at
the annual meeting unless other nominations by shareholders are made in writing
and delivered to the secretary of the savings bank at least five days prior to
the date of the annual meeting. Upon delivery, such nominations shall be posted
in a conspicuous place in each office of the savings bank. Ballots bearing the
names of all persons nominated by the nominating committee and by shareholders
shall be provided for use at the annual meeting. However, if the nominating
committee shall fail or refuse to act at least 20 days prior to the annual
meeting, nominations for directors may be made at the annual meeting by any
shareholder entitled to vote and shall be voted upon.
SECTION 15. NEW BUSINESS. Any new business to be taken up at the annual
meeting shall be stated in writing and filed with the secretary of the savings
bank at least five days before the date of the annual meeting, and all business
so stated, proposed, and filed shall be considered at the annual meeting; but no
other proposal shall be acted upon at the
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annual meeting. Any shareholder may make any other proposal at the annual
meeting and the same may be discussed and considered, but unless stated in
writing and filed with the secretary at least five days before the meeting, such
proposal shall be laid over for action at an adjourned, special, or annual
meeting of the shareholders taking place 30 days or more thereafter. This
provision shall not prevent the consideration and approval or disapproval at the
annual meeting of reports of officers, directors, and committees; but in
connection with such reports, no new business shall be acted upon at such annual
meeting unless stated and filed as herein provided.
SECTION 16. INFORMAL ACTION BY SHAREHOLDERS. Any action required to be
taken at a meeting of the shareholders, or any other action which may be taken
at a meeting of shareholders, may be taken without a meeting if consent in
writing, setting forth the action so taken, shall be given by all of the
shareholders entitled to vote with respect to the subject matter.
ARTICLE III - BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the savings bank
shall be under the direction of its board of directors. The board of directors
shall annually elect a chairman of the board and a president from among its
members and shall designate, when present, either the chairman of the board or
the president to preside at its meetings.
SECTION 2. NUMBER AND TERM. The board of directors shall consist of five
(5) members and shall be divided into three classes as nearly equal in number as
possible. The members of each class shall be elected for a term of three years
and until their successors are elected and qualified. One class shall be elected
by ballot annually.
SECTION 3. REGULAR MEETINGS. A regular meeting of the board of directors
shall be held without other notice than this bylaw immediately after, and at the
same place as, the annual meeting of shareholders. The board of directors may
provide, by resolution, the time and place, within the savings bank's normal
lending territory, for the holding of additional regular meetings without other
notice than such resolution.
SECTION 4. QUALIFICATION. Directors need not be the beneficial owners of
capital stock of the savings bank.
SECTION 5. SPECIAL MEETINGS. Special meetings of the board of directors may
be called by or at the request of the chairman of the board, the president, or
one-third of the directors. The persons authorized to call special meetings of
the board of directors may fix any place, within the savings bank's normal
lending territory, as the place for holding any special meeting of the board of
directors called by such persons.
Members of the board of directors may participate in special meetings by
means of conference telephone or similar communications equipment by which all
persons participating in the meeting can hear each other. Such participation
shall constitute presence in person.
SECTION 6. NOTICE. Written notice of any special meeting shall be given to
each director at least 24 hours prior thereto when delivered personally or by
telegram or at least five days prior thereto when delivered by mail at the
address at which the director is most likely to be reached. Such notice shall be
deemed to be delivered when deposited in the mail so addressed, with postage
prepaid if mailed, when delivered to the telegraph company if sent by telegram,
or when the savings bank receives notice of delivery if electronically
transmitted. Any director may waive notice of any meeting by a writing filed
with the secretary. The attendance of a director at a meeting shall constitute a
waiver of notice of such meeting. The attendance of a director at a meeting
shall constitute a waiver of notice of such meeting, except where a director
attends a meeting for the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any meeting of the board of
directors need be specified in the notice of waiver of notice of such meeting.
SECTION 7. QUORUM. A majority of the number of directors fixed by Section 2
of this Article III shall constitute a quorum for the transaction of business at
any meeting of the board of directors; but if less than such majority is present
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at a meeting, a majority of the directors present may adjourn the meeting from
time to time. Notice of any adjourned meeting shall be given in the same manner
as prescribed by Section 6 of this Article III.
SECTION 8. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors, unless a greater number is prescribed by regulation of the Office
or by these bylaws.
SECTION 9. ACTION WITHOUT A MEETING. Any action required or permitted to be
taken by the board of directors at a meeting may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by all of
the directors.
SECTION 10. RESIGNATION. Any director may resign at any time by sending a
written notice of such resignation to the home office of the savings bank
addressed to the chairman of the board or the president. Unless otherwise
specified, such resignation shall take effect upon receipt by the chairman of
the board or the president. More than three consecutive absences from regular
meetings of the board of directors, unless excused by resolution of the board of
directors, shall automatically constitute a resignation, effective when such
resignation is accepted by the board of directors.
SECTION 11. VACANCIES. Any vacancy occurring on the board of directors may
be filled by the affirmative vote of a majority of the remaining directors
although less than a quorum of the board of directors. A director elected to
fill a vacancy shall be elected to serve until the next election of directors by
the shareholders. Any directorship to be filled by reason of an increase in the
number of directors may be filled by election by the board of directors for a
term of office continuing only until the next election of directors by the
shareholders.
SECTION 12. COMPENSATION. Directors, as such, may receive a stated salary
for their services. By resolution of the board of directors, a reasonable fixed
sum, and reasonable expenses of attendance, if any, may be allowed for actual
attendance at each regular or special meeting of the board of directors. Members
of either standing or special committees may be allowed such compensation for
actual attendance at committee meetings as the board of directors may determine.
SECTION 13. PRESUMPTION OF ASSENT. A director of the savings bank who is
present at a meeting of the board of directors at which action on any savings
bank matter is taken shall be presumed to have assented to the action taken
unless his or her dissent or abstention shall be entered in the minutes of the
meeting or unless he or she shall file a written dissent to such action with the
person acting as the secretary of the meeting before the adjournment thereof or
shall forward such dissent by registered mail to the secretary of the savings
bank within five days after the date a copy of the minutes of the meeting is
received. Such right to dissent shall not apply to a director who voted in favor
of such action.
SECTION 14. REMOVAL OF DIRECTORS. At a meeting of shareholders called
expressly for that purpose, any director may be removed for cause by a vote of
the holders of a majority of the shares then entitled to vote at an election of
directors. If less than the entire board is to be removed, no one of the
directors may be removed if the votes cast against the removal would be
sufficient to elect a director if then cumulatively voted at an election of the
class of directors of which such director is a part. Whenever the holders of the
shares of any class are entitled to elect one or more directors by the
provisions of the charter or supplemental sections thereto, the provisions of
this section shall apply, in respect to the removal of a director or directors
so elected, to the vote of the holders of the outstanding shares of that class
and not to the vote of the outstanding shares as a whole.
ARTICLE IV - EXECUTIVE AND OTHER COMMITTEES
SECTION 1. APPOINTMENT. The board of directors, by resolution adopted by a
majority of the full board, may designate the chief executive officer and two or
more of the other directors to constitute an executive committee. The
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designation of any committee pursuant to this Article IV and the delegation of
authority shall not operate to relieve the board of directors, or any director,
of any responsibility imposed by law or regulation.
SECTION 2. AUTHORITY. The executive committee, when the board of directors
is not in session, shall have and may exercise all of the authority of the board
of directors except to the extent, if any, that such authority shall be limited
by the resolution appointing the executive committee; and except also that the
executive committee shall not have the authority of the board of directors with
reference to: the declaration of dividends; the amendment of the charter or
bylaws of the savings bank, or recommending to the stockholders a plan of
merger, consolidation, or conversion; the sale, lease, or other disposition of
all or substantially all of the property and assets of the savings bank
otherwise than in the usual and regular course of its business; a voluntary
dissolution of the savings bank; a revocation of any of the foregoing; or the
approval of a transaction in which any member of the executive committee,
directly or indirectly, has any material beneficial interest.
SECTION 3. TENURE. Subject to the provisions of Section 8 of this Article
IV, each member of the executive committee shall hold office until the next
regular annual meeting of the board of directors following his or her
designation and until a successor is designated as a member of the executive
committee.
SECTION 4. MEETINGS. Regular meetings of the executive committee may be
held without notice at such times and places as the executive committee may fix
from time to time by resolution. Special meetings of the executive committee may
be called by any member thereof upon not less than one day's notice stating the
place, date, and hour of the meeting, which notice may be written or oral. Any
member of the executive committee may waive notice of any meeting and no notice
of any meeting need be given to any member thereof who attends in person. The
notice of a meeting of the executive committee need not state the business
proposed to be transacted at the meeting.
SECTION 5. QUORUM. A majority of the members of the executive committee
shall constitute a quorum for the transaction of business at any meeting
thereof, and action of the executive committee must be authorized by the
affirmative vote of a majority of the members present at a meeting at which a
quorum is present.
SECTION 6. ACTION WITHOUT A MEETING. Any action required or permitted to be
taken by the executive committee at a meeting may be taken without a meeting if
a consent in writing, setting forth the action so taken, shall be signed by all
of the members of the executive committee.
SECTION 7. VACANCIES. Any vacancy in the executive committee may be filled
by a resolution adopted by a majority of the full board of directors.
SECTION 8. RESIGNATIONS AND REMOVAL. Any member of the executive committee
may be removed at any time with or without cause by resolution adopted by a
majority of the full board of directors. Any member of the executive committee
may resign from the executive committee at any time by giving written notice to
the president or secretary of the savings bank. Unless otherwise specified, such
resignation shall take effect upon its receipt; the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 9. PROCEDURE. The executive committee shall elect a presiding
officer from its members and may fix its own rules of procedure which shall not
be inconsistent with these bylaws. It shall keep regular minutes of its
proceedings and report the same to the board of directors for its information at
the meeting held next after the proceedings shall have occurred.
SECTION 10. OTHER COMMITTEES. The board of directors may by resolution
establish an audit, loan, or other committee composed of directors as it may
determine to be necessary or appropriate for the conduct of the business of the
savings bank and may prescribe the duties, constitution, and procedures thereof.
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ARTICLE V - OFFICERS
SECTION 1. POSITIONS. The officers of the savings bank shall be a
president, one or more vice presidents, a secretary, and a treasurer, each of
whom shall be elected by the board of directors. The board of directors may also
designate the chairman of the board as an officer. The president shall be the
chief executive officer, unless the board of directors designates the chairman
of the board as chief executive officer. The president shall be a director of
the savings bank. The offices of the secretary and treasurer may be held by the
same person and a vice president may also be either the secretary or the
treasurer. The board of directors may designate one or more vice presidents as
executive vice president or senior vice president. The board of directors may
also elect or authorize the appointment of such other officers as the business
of the savings bank may require. The officers shall have such authority and
perform such duties as the board of directors may from time to time authorize or
determine. In the absence of action by the board of directors, the officers
shall have such powers and duties as generally pertain to their respective
offices.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the savings bank
shall be elected annually at the first meeting of the board of directors held
after each annual meeting of the stockholders. If the election of officers is
not held at such meeting, such election shall be held as soon thereafter as
possible. Each officer shall hold office until a successor has been duly elected
and qualified or until the officer's death, resignation, or removal in the
manner hereinafter provided. Election or appointment of an officer, employee, or
agent shall not of itself create contractual rights. The board of directors may
authorize the savings bank to enter into an employment contract with any officer
in accordance with regulations of the Office, but no such contract shall impair
the right of the board of directors to remove any officer at any time in
accordance with Section 3 of this Article V.
SECTION 3. REMOVAL. Any officer may be removed by the board of directors
whenever in its judgment the best interests of the savings bank will be served
thereby, but such removal, other than for cause, shall be without prejudice to
the contractual rights, if any, of the person so removed.
SECTION 4. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise may be filled by the board
of directors for the unexpired portion of the term.
SECTION 5. REMUNERATION. The remuneration of the officers shall be fixed
from time to time by the board of directors.
ARTICLE VI - CONTRACTS, LOANS, CHECKS, AND DEPOSITS
SECTION 1. CONTRACTS. To the extent permitted by regulations of the Office,
and except as otherwise prescribed by these bylaws with respect to certificates
for shares, the board of directors may authorize any officer, employee, or agent
of the savings bank to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the savings bank. Such authority may
be general or confined to specific instances.
SECTION 2. LOANS. No loans shall be contracted on behalf of the savings
bank and no evidence of indebtedness shall be issued in its name unless
authorized by the board of directors. Such authority may be general or confined
to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts, or other orders for the
payment of money, notes, or other evidences of indebtedness issued in the name
of the savings bank shall be signed by one or more officers, employees, or
agents of the savings bank in such manner as shall from time to time be
determined by the board of directors.
SECTION 4. DEPOSITS. All funds of the savings bank not otherwise employed
shall be deposited from time to time to the credit of the savings bank in any
duly authorized depositories as the board of directors may select.
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ARTICLE VII - CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares of
capital stock of the savings bank shall be in such form as shall be determined
by the board of directors and approved by the Office. Such certificates shall be
signed by the chief executive officer or by any other officer of the savings
bank authorized by the board of directors, attested by the secretary or an
assistant secretary, and sealed with the corporate seal or a facsimile thereof.
The signatures of such officers upon a certificate may be facsimiles if the
certificate is manually signed on behalf of a transfer agent or a registrar
other than the savings bank itself or one of its employees. Each certificate for
shares of capital stock shall be consecutively numbered or otherwise identified.
The name and address of the person to whom the shares are issued, with the
number of shares and date of issue, shall be entered on the stock transfer books
of the savings bank. All certificates surrendered to the savings bank for
transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares has been surrendered and
cancelled, except that in the case of a lost or destroyed certificate, a new
certificate may be issued upon such terms and indemnity to the savings bank as
the board of directors may prescribe.
SECTION 2. TRANSFER OF SHARES. Transfer of shares of capital stock of the
savings bank shall be made only on its stock transfer books. Authority for such
transfer shall be given only by the holder of record or by his or her legal
representative, who shall furnish proper evidence of such authority, or by his
or her attorney authorized by a duly executed power of attorney and filed with
the savings bank. Such transfer shall be made only on surrender for cancellation
of the certificate for such shares. The person in whose name shares of capital
stock stand on the books of the savings bank shall be deemed by the savings bank
to be the owner for all purposes.
ARTICLE VIII - FISCAL YEAR
The fiscal year of the savings bank shall end on the 30th day of June of
each year. The appointment of such independent accountants shall be subject to
annual ratification by the shareholders.
ARTICLE IX - DIVIDENDS
Subject to the terms of the savings bank's charter and the regulations and
orders of the Office, the board of directors may, from time to time, declare,
and the savings bank may pay, dividends on its outstanding shares of capital
stock.
ARTICLE X - CORPORATE SEAL
The board of directors shall provide a savings bank seal which shall be two
concentric circles between which shall be the name of the savings bank. The year
of incorporation or an emblem may appear in the center.
ARTICLE XI - AMENDMENTS
These bylaws may be amended in a manner consistent with regulations of the
Office at any time by a majority of the full board of directors or by a majority
of the votes cast by the stockholders of the savings bank at any legal meeting.
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REVOCABLE PROXY
(SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
NEWPORT FEDERAL SAVINGS BANK
FOR A SPECIAL MEETING OF MEMBERS
TO BE HELD ON ____________, 1997)
The undersigned member of Newport Federal Savings Bank (the "Bank")
hereby appoints _______________, ____________ and _________________, or any one
of them, with full powers of substitution, as attorneys-in-fact and agents for
and in the name of the undersigned, to vote such votes as the undersigned may be
entitled to cast at the Special Meeting of Members of the Bank to be held at
__________________, ____________________, Newport, Arkansas, on
________________, _____________, 1997, at __:__ _.m., Central Time, and at any
adjournments thereof. They are authorized to cast all votes to which the
undersigned is entitled, as follows:
FOR AGAINST
--- -------
Approval of the Plan of Conversion providing
for the conversion of the Bank from a federally
chartered mutual savings bank to a federally
chartered stock savings bank as a wholly owned
subsidiary of North Arkansas Bancshares, Inc.,
including the amendment of the Bank's Federal
Mutual Charter and Bylaws to read in the form
of a Federal Stock Charter and Bylaws for the Bank.
[_] [_]
In their discretion, on any other matters that may
lawfully come before the meeting.
NOTE: The Board of Directors is not aware of any other matters that may come
before the Meeting.
THIS PROXY WILL BE VOTED FOR THE PLAN OF CONVERSION IF
NO CHOICE IS MADE HEREON
Should the undersigned be present and elect to vote at said Meeting or
at any adjournment thereof and, after notification to the Secretary of Newport
Federal Savings Bank at said Meeting of the member's decision to terminate this
Proxy, then the power of said attorneys-in-fact or agents shall be deemed
terminated and of no further force and effect. The undersigned hereby revokes
any and all proxies heretofore given.
The undersigned acknowledges receipt of a Notice of Special Meeting of
the Members of Newport Federal Savings Bank to be held on ___________, 1997 and
a Proxy Statement dated ______________, 1997 and a Prospectus dated
______________, 1997 prior to the execution of this Proxy.
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Date
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Signature
Note: Only one signature is required in
the case of a joint account.